If you’ve heard someone say quantum computers will change everything, take a deep breath.
Yes, the potential is massive. But we’re not quite there yet.
Quantum computing is exciting, but investing solely in quantum companies? Not our strategy.
Here’s Why:
- Unproven Technology: Pure quantum computing companies haven’t yet demonstrated reliable, profitable applications. Until they do, investment risk remains high.
- Constant Fundraising & Dilution: Many quantum startups continually need fresh capital. Frequent fundraising usually means ongoing dilution for shareholders.
Our Investment Approach:
Instead of betting directly on quantum computing startups, we invest in proven businesses, making calculated investments in quantum research:
Alphabet (Google) and Microsoft:
- Both have profitable core businesses with substantial cash flows.
- Each has extensive resources and infrastructure to sustainably fund quantum research.
- They benefit from quantum breakthroughs without jeopardising their financial stability.
Google’s Quantum Leap
In late 2024, Google dropped a bombshell: their new Willow quantum chip can perform a test in under five minutes that would take today’s fastest supercomputer ten septillion years (that’s a 1 followed by 25 zeros).
- That’s longer than the universe has existed.
- With 105 qubits capable of real-time error correction, Google addressed a key engineering hurdle.
- For context: Qubits are fragile. Even a subatomic particle can throw them off.
The test was run at a custom-built facility in Santa Barbara, CA.
It’s impressive. But let’s zoom out.
Microsoft’s Different Road
Microsoft took a different path. Their Majorana 1 chip introduces something called topological qubits.
- In theory, these qubits are more stable and less prone to error.
- Fewer errors mean fewer qubits needed, 400,000 vs. 10 million for complex tasks like encryption-breaking.
- For example, breaking RSA-2048 encryption could take 400,000 topological qubits vs. 10 million traditional ones.
Here’s the catch:
- Microsoft hasn’t fully proven this works.
- Their chip only has 8 qubits—a milestone other approaches hit two decades ago.
- So this is promising, but still very early.
What Quantum Computers Could Actually Do
Let’s skip the sci-fi and talk real-world potential.
Where quantum computing could shine:
- Cryptography: Break current encryption, force a move to quantum-safe protocols.
- Drug discovery: Simulate molecules quickly and accurately.
- Battery materials: Design cobalt-free cathodes without trial-and-error.
- Nuclear fusion: Model plasma behaviour in fusion reactors.
- AI & Machine Learning: Efficiently model complex probability distributions.
Imagine waking up to news that quantum computers have solved a previously incurable disease by simulating billions of molecular combinations overnight.
Where it won’t help:
- Browsing the internet faster.
- Writing emails.
- Running Excel (sorry).
The Engineering Challenge
Quantum computers are mind-blowingly powerful in theory, but incredibly hard to build in practice.
- Qubits are sensitive. Most systems operate near -270°C to prevent errors.
- Adding more qubits usually increases error… unless you solve that.
- Google claims its new chip actually reduces system error as you add qubits. That’s a big deal.
Investors Are Watching Closely
In 2024, quantum computing stocks skyrocketed—some up 1,000%. In 2025? Many have dropped double digits.
It’s a classic hype cycle.
But serious capital is committed:
- $50B+ pledged globally.
- Psi Quantum received $620M from Australia + $500M for a new Illinois campus.
- Major partnerships in pharmaceuticals, automotive, and chemicals.
Not Everything Needs to Be Perfect
You don’t need a million-qubit machine to do something meaningful for our society.
- Early wins will likely come from quantum simulation—a sweet spot for current hardware.
- This includes proof-of-concept projects in chemicals, materials, and energy.
- Think: better MRI imaging or locating critical minerals 2km underground.
Algorithms Matter More Than You Think
Hardware is half the battle. Algorithms are the other half.
- Early simulations required N¹⁰ complexity. Now we’re down to N³.
- That’s the difference between “impossible” and “just a few minutes.”
- But developing these algorithms is still a bottleneck and will be for a while.
Final Thoughts
- Practical quantum computing might arrive by 2035—or it might not.
- But real economic value could emerge within 3–5 years through early, specialised use cases.
- These machines won’t replace classical computers. They’ll complement them in key areas.
The truth?
Quantum computing is real, messy, and full of promise. It’s not magic. It’s physics — barely contained.
Awet Ghirmay, Head of Investment Research
If you want to learn more about this topic, please find the link here.
More information about our fund can be found here: Hargreaves Lansdown or AJ Bell
Risk warnings
The value of investments and the income derived from them may fall as well as rise. You may not get back what you invest. This communication is for general information only and is not intended to be individual advice. You are recommended to seek competent professional advice before taking any action. All statements concerning the tax treatment of products and their benefits are based on our understanding of current tax law and HM Revenue and Customs practice. Levels and bases of tax relief are subject to change. This blog is based on my own observations and opinions.
