Quantum technology firms race to market as industry sees ‘inflection point’

Quantum technology firms are braving turbulent markets to announce this year, as the industry seeks to capitalize on the latest scientific breakthroughs and push experimental technologies into business.

One such company, Xanadu Quantumwhich builds quantum computing hardware and software, began trading on Nasdaq and the Toronto Stock Exchange on Friday, gaining 15% in the US after a rocky start to public markets.

Xanadu – the chip giant’s quantum counterpart Nvidia – started after meeting with Crane Harbor Acquisition, Special Purpose Acquisition Company (SPAC), also known as ‘exploration firm.’

A SPAC is a shell company designed specifically to raise capital through an initial public offering, and has become a common way to start a startup’s listing.

Xanadu’s listing came a week after the Singapore-based quantum software company Horizon Quantum started trading after its merger with dMY Squared Technology Group company.

dMY Technology Group has taken over IonQ announced in 2021 by merging with one of its shell companies, making it the first publicly traded, pure-play quantum computing company.

Since then, SPACs, which offer a faster way to list with less regulation, have become a popular way for quantum companies that want to launch an initial public offering.

Quantum computing uses the principles of quantum mechanics to process information in ways that traditional computers cannot, with potential applications across drug discovery, materials science, cryptography and more. While the technology is still experimental, it is widely expected to have a revolutionary effect on computing.

The latest wave of listings comes at a turbulent time for global markets, as tensions in the Middle East erode investor confidence, particularly in risky, speculative assets such as quantum companies.

Despite finishing its first day at the top, Nasdaq-listed shares of Xanadu is down more than 10% in recent trading, while Horizon Quantum is down 18% since its debut.

Meanwhile, the neutral atom quantum computing company Inflectionwhich debuted on the New York Stock Exchange on February 17 with a blank check deal, saw its stock drop by more than 30%.

However, companies seem willing to brave these volatile markets to take advantage of the industry’s recent success.

“It’s an interesting time to enter the public markets, of course, with everything that’s happening in the world… But for a quantum computer, it’s actually a good time to get out,” Dr. Joe Fitzsimons, founder and CEO of Horizon Quantum, told CNBC.

“We’re starting to hit something high,” he said, adding that there have been significant breakthroughs in the past 18 months.

In 2024 and 2025, several companies and research groups have demonstrated improved correction of quantum errors, which is an important requirement for building reliable machines.

Other important factors include higher qubit numbers – which increase the potential size and complexity of problems that a quantum computer can represent and help solve – and coherence times, which allow more reliable calculations by reducing the impact of noise and errors.

“The first indications of practical quantum benefits are expected to be around 100 qubits – the industry limit is approaching in 2028-2029,” Velu Sinha, partner, Bain & Company, told CNBC.

“But for applications with commercial impact such as drug discovery or large-scale material applications, you need 1,000 to 10,000 qubits, which could be available in the mid-2030s,” he added.

This so-called “quantum advantage” refers to the most important fact that quantum computers solve real-world problems faster, more efficiently, or more accurately than a traditional computer.

As companies race to pursue quantum advantage, investment in the space is increasing. Tech giants, including Alphabet, Microsoft, Amazon and IBM, have poured millions into the technology, even though they have largely barred from the private sector.

“The story has gone from a scientific project to a commercial one, and companies are taking advantage of that window,” Sinha said.

“Quantum is one of the small number of technology groups that investors see as inevitable… The market capable of handling full growth is estimated at $ 100 to $ 250 billion, which gives the patient’s money a reason to look past the uncertain past,” he added.

Early commercial applications also appear in areas such as optimization, financial modeling and chemical simulations.

“The timing was right [to go public] because quantum, especially neutral atoms, are moving from scientific progress to commercial importance,” Matthew Kinsella, CEO of Infleqtion, told CNBC.

“Going public gives us the money to accelerate the business and invest in aftermarkets where we already see customer demand,” he said, “we think the business will happen in stages.”

For small quantum upstarts, near-term funding opportunities are key to securing investor support for their long-term research.

Horizon Quantum Computing, for example, is focused on developing software that can run both classical and quantum computing, positioning the company to generate revenue before more quantum computing becomes operational.

The company’s CEO said the newly raised funds will be used to expand its research team and provide the first version of its software to early access users this year.

Xanadu Quantum has also invested in cloud-based platforms that allow developers to pay to test quantum algorithms using existing hardware.

Historically, governments have played a key role in developing the quantum sector, helping to reduce its heavy capital requirements and shortfall in immediate returns.

The United States, China and the European Union have committed billions of dollars to quantum research and development, with the aim of reaping the benefits of computer policy and cyber security.

Those government efforts often focus on or include support from national universities and laboratories.

However, the latest wave of public listings highlights how the industry is changing from academic and social studies to a commercial market, just as adoption times are still uncertain.

“Quantum computers will be able to do billions of calculations at once, and that will change the way we do computing,” said Marc Einstein, director of research at Counterpoint Research.

The day when people have multiple computers in their offices or homes may be decades away, Einstein said. But a future where large corporations own the machines and provide services for quantum computing could arrive sooner, he added.