The Promising Future of Quantum Computing and Its Stock Potential

The field of quantum computing is garnering significant attention as the technology continues to evolve. Estimates by Boston Consulting Group (BCG) suggest that the revenue generated by the quantum computing industry could reach a staggering $170 billion after 2040. Furthermore, the annual value derived from quantum hardware and software for end-users might soar to as much as $850 billion.

Quantum computing leverages the unique probabilistic properties of quantum mechanics. Unlike a traditional computing bit, which can only exist in one of two states (0 or 1), a quantum bit—or qubit—can exist in multiple states simultaneously. This characteristic allows quantum computers to perform specific computations exponentially faster than their classical counterparts.

Despite its immense potential, quantum computing remains a technology that is not yet commercially viable. Currently, there is no quantum computer capable of solving real-world problems more efficiently than classical computers. One of the major challenges is error correction; qubits are delicate, and their fragility can lead to errors that can disrupt computations. The future success of the quantum computing industry is contingent on overcoming these error correction hurdles, a key detail in BCG's projections.

Quantum Computing's Business Impact

Although the technology is not yet ready for widespread commercial use, numerous companies and organizations are entering agreements to explore quantum computing for future applications. A prominent player in this market is International Business Machines (IBM), which has been a leader in quantum computing for many years.

IBM has been developing quantum computers for decades and has deployed nearly 80 quantum systems available to external users, far exceeding the capabilities of its competitors. Among them are 13 operational quantum computers featuring more than 100 qubits. The company has also created Qiskit, a popular software development kit that many projects rely on, making it the leading platform in the realm of quantum computing.

Since 2017, IBM has accumulated almost $1 billion in agreements related to its quantum computing initiatives. Although quantum computing's practical applications may still be a while off, the financial opportunities for companies involved are significant. According to BCG, annual revenue from the quantum computing sector might rise to $2 billion before 2030, before potentially increasing tenfold in the following years as the technology approaches commercial readiness. IBM is strategically placed to capture a substantial share of that revenue.

IBM's quantum computing revenue is expected to grow gradually as more businesses investigate this technology. However, it could see a significant increase if and when quantum computing becomes useful in real-world applications. By 2028, IBM aims to reveal the first quantum computer capable of error correction. After achieving this milestone, the focus will shift to scaling the technology further. Following 2033, IBM projects that quantum computers could possess thousands of qubits, paving the way for true commercial viability, albeit with no guarantees.

Investing in Quantum Computing Stocks

For those considering investments in quantum computing, it is important to note that pure-play quantum computing companies such as IonQ or Rigetti Computing come with higher risks. These firms are currently operating at a loss and will need to endure until the quantum computing market matures and becomes profitable.

In contrast, IBM is experiencing steady growth. The company anticipates an annual revenue growth of over 5%, with free cash flow expected to rise slightly faster. Its hybrid cloud computing and artificial intelligence sectors are performing well, and the high-margin software aspect is boosting profit margins. Therefore, even if quantum computing takes longer than expected to achieve commercial viability, IBM is likely to deliver solid returns for its investors.

For long-term investors seeking exposure to quantum computing advancements, IBM represents a lower-risk option to capitalize on the potential transformative technology.

Quantum, Computing, IBM