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Separating the wheat from the chaff: Quantum technology in an era of hype

Investors can cut through the noise by understanding which technologies are likely to be viable in the short term.

by Victor Galitski, Dmitry Green, Benjamin Lev, Yuval Oreg, and Henning Soller

Quantum computing has a knack for staying in the headlines and stoking the imagination of executives. In September, for example, IBM announced a plan to build a 1,000-qubit quantum computer by 2023, an ambitious goal that would represent a significant acceleration in development.1

This attention-grabbing news follows a number of recent technical advances in quantum computing: the possibility of entangling and leveraging a larger number of qubits in atoms, the production of superconducting interference devices at intermediate scale, and the potential to protect the topology of quantum states (that is, making them immune to the typical localized sources of noise as vibrations and electric fields).

As another indication of rising interest, venture-capital (VC) firms have been circling the space on the lookout for promising breakthroughs. The past decade has seen approximately $1.5 billion of VC investments in quantum computing start-ups.2

Many investors struggle with the fact that numerous emerging ideas and technologies are questionable. On the one hand, all the hype around quantum computing—claims about its game-changing potential—has made it difficult to separate the feasible applications in the short term from possibilities that are still years or decades away from being realized, if ever. On the other hand, new possibilities for controlling quantum states have led to a widespread belief that a second quantum revolution could be around the corner, in which quintessentially quantum phenomena (rather than merely wavelike phenomena) are harnessed to develop new technologies.

This dynamic raises two main questions: what is a realistic outlook for the industrial applications of quantum technology over the next several years, and what are relevant investment opportunities?

A realistic outlook for the industrial application of quantum technology

One of the common misperceptions about quantum computing is that its industrial application is a binary event—one day soon, we’ll flip a switch and the world will suddenly transform. In truth, quantum technology has many facets and timelines, as demonstrated by the application of several current first-generation quantum technologies and the development of new ones on the horizon (exhibit):

  • Lasers, GPS, MRI, and quantum magnetometers have been used in many industrial contexts for decades.
  • Quantum cryptography has already found wide application in several industries and regions.
  • Chemical companies have already begun to explore the first applications of sensors.
  • Atom interferometry and atomic clocks are being used in gravimeters for geophysical surveying and inertial sensing.

Despite recent breakthroughs by research laboratories, second-generation quantum technologies will require much more time to reach maturity. Specifically, the advent of quantum computers at industrial scale could take from several years to decades. This timeline also means that the possibility of breaking security protocols such as RSA is still a long way out, leaving plenty of time to adopt other protocols.

Quantum technology is multifaceted and widely applicable.
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Relevant possibilities for investments

Taking a clear-eyed perspective on the current state and possible advancement of quantum technology still suggests several possible investments that could be economically viable in the short term. These include the following developments and applications:

  • Regardless of the underlying technology (superconducting qubits, atomic inclusions in silicon, quantum dots, color centers in diamond, atoms—Rydberg or with cavity quantum electrodynamics, trapped ions, mechanical resonators, topological qubits, or any other platform), quantum computers will require peripheral classical electronic and optical devices to control and measure the quantum device (for example, single-photon sources and detectors).
  • Advanced nonlinear optical elements and microfabrication foundries.
  • Compact and stable lasers.
  • High-performance cryogenic and laser-refrigeration techniques to isolate quantum technologies from environmental disturbance at scale.

Key developments in these areas may therefore make these quantum technologies a safer investment bet than start-ups, which have underlying technologies and business models whose viability can be difficult to evaluate.

As with other emerging technologies such as blockchain, quantum computing and related technologies have captured the attention of executives and investors alike. This hype is partially justified by initial technological breakthroughs—specifically in the control of quantum states. Still, several start-ups are also questionable due to underlying physical challenges that remain unresolved.

The path forward has yet to come into focus, but that doesn’t mean companies shouldn’t explore avenues to value now. Investors and interested companies could pursue two avenues: first, identify possible investments in base technologies for quantum computers or supporting technologies to derisk direct investments into certain start-ups; and second, build up quantum capabilities and knowledge in order to evaluate possible start-ups and their offerings in a changing market.

This blog post is based, in part, on the article “How to profit from quantum technology without building quantum computers” by Dmitry Green, Henning Soller, Yuval Oreg, and Victor Galitski, in Nature Reviews Physics, 2021, Volume 3, pp. 150–52,

Victor Galitski is a professor of physics at the University of Maryland and cofounder of Aspen Quantum Consulting, where Dmitry Green is an advisor; Benjamin Lev is a professor of physics at Stanford University and a partner at Aspen Quantum Consulting; Yuval Oreg is a professor of physics at the Weizmann Institute of Science and scientific cofounder of Aspen Quantum Consulting; and Henning Soller is a partner in McKinsey’s Frankfurt office.

1 Jay Gambetta, “IBM’s road map for scaling quantum technology,” IBM, September 15, 2020,
2 Keith Kirkpatrick and Clint Wheelock, “Tractica report: Quantum computing for enterprise markets,” ITPro Today, November 26, 2018,; McKinsey research.