Quantum computing could represent the next secular growth trend for the tech sector. From 2025 to 2032, Fortune Business Insights expects the global quantum computing market to expand at a CAGR of 34.8% as those systems are used in more mainstream applications.
However, quantum computing companies can also be challenging to understand. Many of the early movers are also generating volatile revenues, racking up steep losses, and trading at sky-high valuations. Let's discuss what quantum computing systems do, why they could disrupt classical computers, and which three companies could profit from the market's long-term expansion.
Image source: Getty Images.
What do quantum computers do?
Classical computers store zeros and ones separately in binary bits, but quantum computers store zeros and ones simultaneously in qubits. That difference enables quantum computers to process specific computing tasks at a much faster rate than their classical counterparts.
Yet, quantum computers are also pricier, larger, less power-efficient, and prone to more errors than classical computers. That's why they're still mainly used in niche research projects at universities and government agencies, rather than in mainstream computing applications.
For quantum computers to gain widespread adoption, their systems need to become cheaper, smaller, and more scalable. However, many early movers in this market are still using different technologies to achieve a quantum state -- and it is still unclear which of those technologies will actually drive quantum computers toward the mainstream market.
Meet three of those ambitious companies
Rigetti Computing (RGTI +3.56%) accelerates electrons through "superconducting loops" to achieve a quantum state. These systems are relatively inexpensive to manufacture, but they're expensive to operate because they require cryogenic refrigeration.
Many bigger tech companies, including IBM (IBM 2.08%) and Alphabet's (GOOG +2.66%) (GOOGL +2.81%) Google, also use electron-driven superconducting loops in their quantum systems because they're more scalable than other types of systems.
Rigetti develops modular and non-modular quantum processing units (QPUs), as well as complete quantum systems. It also provides a cloud platform for developing quantum algorithms.
NASDAQ: RGTI
Key Data Points
IonQ (IONQ +0.39%) uses lasers to trap and manipulate individual ions in a quantum state. These "trapped ion" systems have a higher gate fidelity (accuracy) rate than electron-driven systems and don't require cryogenic refrigeration; however, they can also be expensive to operate because teams of experts must constantly recalibrate their delicate lasers.
IonQ sells several quantum systems, and it serves up its processing power as a cloud-based service. It faces fewer direct competitors than Rigetti and other electron-based companies. A growing number of government contracts is driving its near-term growth.
NYSE: IONQ
Key Data Points
Last but not least, Quantum Computing Inc. (QUBT +0.40%) -- more commonly known as QCi -- develops photonic chips that transmit data using light particles (photons). These chips have two significant advantages: they can be easily mass-produced at conventional chip fabs and operate at room temperature. Photonic chips still have lower gate fidelity than electron- and ion-driven systems, but this could change as the company scales up production of its newer thin-film lithium niobate (TFLN) photonic chips and launches its own Dirac-3 quantum system. It's also expanding its Qatalyst cloud platform to lock in more developers.
NASDAQ: QUBT
Key Data Points
How fast are these three companies growing?
Rigetti and IonQ established early movers' advantages in the quantum market, but OCi could significantly ramp up its shipments of photonic chips over the next few years.
|
Company |
2024 Revenue (Actual) |
2025 Revenue (Estimate) |
2026 Revenue (Estimate) |
2027 Revenue (Estimate) |
3-Year CAGR |
|---|---|---|---|---|---|
|
Rigetti |
$10.8 million |
$7.6 million |
$20.5 million |
$45.8 million |
62% |
|
IonQ |
$43.1 million |
$108.6 million |
$197.6 million |
$316.5 million |
94% |
|
QCi |
$0.4 million |
$0.8 million |
$2.8 million |
$15.0 million |
235% |
Data source: Marketscreener.
All three of these stocks appear to be priced relatively high compared to their near-term growth prospects. Rigetti, IonQ, and QCi already trade at 161 times, 52 times, and 159 times their projected sales for 2027, respectively. Yet if they match analysts' estimates, grow their revenue at a CAGR of 30% over the following eight years, and trade at 30 times their current year's sales, here's what might happen by 2035.
|
Company |
2035 Revenue (30% CAGR from 2027) |
2035 Market Cap (At 30 Times Revenue) |
Increase from Current Market Cap |
|---|---|---|---|
|
Rigetti |
$374 million |
$11.2 billion |
52% |
|
IonQ |
$2.6 billion |
$77.4 billion |
375% |
|
QCi |
$122 million |
$3.7 billion |
55% |
Data source: Marketscreener, author's calculations.
We should take those estimates with a grain of salt, but they suggest that these high-flying quantum stocks could sustain their bubbly valuations over the next decade. They could also grow at even faster rates as they expand and absorb their smaller industry peers.
They're still speculative bets on a speculative market
Rigetti, IonQ, and QCi will remain speculative and volatile stocks for the foreseeable future. However, they could generate impressive gains for investors who can tune out the near-term noise and focus on the long-term growth potential of the quantum computing market.
