Quantum Computing: A Long-Term Investment Thesis

Abstract

Quantum computing is an emerging technology that could eventually solve categories of problems beyond the reach of classical computers, with the most promising near-term applications in drug discovery, materials simulation, financial modelling and logistics optimization. The sector remains pre-commercial: qubit instability, high error rates and demanding manufacturing requirements mean that scalable, fault-tolerant systems are unlikely before the 2030s. This paper assesses the investable universe across two distinct groups — pure-play developers and established enabling suppliers — and argues that quantum computing is best treated as a small, long-horizon satellite allocation rather than a core portfolio holding.

Key findings

1. 01Quantum-computing companies generated over $1 billion in global revenue in 2025, a figure projected to reach $4.4 billion by 2028 and roughly $97 billion by 2035 as fault-tolerant systems mature.
2. 02Pure-play developers (IonQ, Quantinuum, D-Wave, Rigetti) trade at extreme revenue multiples — Price/Sales ratios from roughly 58x to nearly 459x — while reporting operating margins as low as -1,915%, reflecting valuations built on future technological leadership rather than current earnings.
3. 03Established enabling suppliers (Keysight, Oxford Instruments, Coherent) offer a more balanced risk-return profile, combining double-digit operating margins and positive free cash flow with indirect exposure to quantum-sector growth through photonics, cryogenics and test equipment.
4. 04Private investment in quantum start-ups reached $12.6 billion in 2025 — 6.3 times 2024 levels — but funding has become increasingly concentrated, with roughly 60% going to the ten largest deals.
5. 05A growth-oriented investor with a 10–15 year horizon could reasonably consider an allocation of approximately 3–5%, diversified across both pure-play developers and enabling suppliers rather than concentrated in a single company or platform.

Discussion

The analysis draws on institutional research — principally McKinsey's Quantum Technology Monitor — alongside company filings and Yahoo Finance market data as of July 2026, comparing the financial profiles of four pure-play quantum developers against three established enabling-technology suppliers.

Because a single industry index would obscure the sharp divide between pre-revenue developers and profitable suppliers, the paper evaluates each group separately across growth potential, profitability, balance-sheet risk, dilution risk and appropriate holding period, concluding that diversification across both groups is preferable to betting on a single winner or platform.