Special Edition Market Note: Quantum Computing Breakthrough

1. Quantum Computing Making Headlines Quantum computing is back in the headlines this week, with IBM making news across financial markets. With investor attention on this fast-moving space, we’re dedicating this newsletter to explaining what quantum computing is, why it matters, and why IBM is leading the charge.

Photo of a Quantum Computer^[1]

2. Quantum Computing Explained Quantum computing represents an advancement beyond the most powerful supercomputers we have today. The difference lies in how these machines process information.

Traditional computers use binary code (1’s and 0’s) to process and calculate data. To solve a problem, computers calculate lines of binary code one by one. While each calculation may take a few milliseconds, for problems like sorting large databases, these individual calculations add up, resulting in long computation times.
 
Quantum computers, on the other hand, use qubits (quantum bits) instead of binary bits. A qubit is different as it can be both 1 and 0 at the same time. This allows quantum computers to perform hundreds of calculations simultaneously, performing the same calculation as normal computers in a fraction of the time.

The technology for quantum computing is not theoretical. Quantum processors have been in development for decades and currently exist with setups resembling golden chandeliers. For readers interested in diving deeper into this technology, IBM has an excellent article explaining quantum computing here.

3. HSBC and IBM’s Breakthrough in Finance. On Thursday, the market saw a demonstration of quantum’s market impact with HSBC announcing a world-first deployment of quantum computing in financial markets. Using IBM’s most advanced Heron quantum processor, HSBC applied quantum processing to European bond trading data, producing a 34% improvement in predicting the price of a traded bond.

This marks the first time a bank has used real trades at scale to show quantum’s edge. By proving that quantum can enhance efficiency in bond trading and over-the-counter markets, HSBC’s project signals the start of a flurry of adoption across financial services. The market reaction was immediate: IBM shares surged 5% following the announcement, highlighting investor confidence in its leadership and the real-world potential of quantum computing.

4. IBM’s Quantum Leadership. At the center of quantum development is IBM, which has established itself as the industry leader. The company currently has 75 quantum computers in production, more than all competitors combined.

IBM’s strategy is crystal clear: build the dominant quantum platform. Through its Qiskit software, IBM is aiming to make Qiskit the predominant quantum software standard. Already deployed worldwide, Qiskit is being seeded in universities so that the next generation of engineers learns to code in Qiskit, a deliberate effort to lock in ecosystem leadership.

The firm’s long-term vision includes the IBM Quantum Data Center and IBM Quantum Client System, establishing an end-to-end stack where companies can build, run, and scale applications on IBM’s quantum backbone. In essence, IBM isn’t just building computers. It’s building the operating system and infrastructure for the quantum era.

Graph 1: IBM Quantum Computing Deployed Systems^[2]

5. Market Potential and Momentum IBM estimates the total addressable market for quantum computing to reach $1.3 trillion by 2036. The company already boasts hundreds of use cases across industries, from financial services (market simulations, fraud detection) to energy efficiency, utilities, solar, battery technology, healthcare, and drug discovery. IBM has already eclipsed $1 billion in bookings and signings since quantum commercialization began in 2017. While large-scale commercial use will take years to unfold, the trajectory is clear. Just as AI reshaped markets over the past decade, we expect quantum computing to do the same, being a strong theme of growth for the future.

Sources:

^[1] New York Times

^[2] IBM, as of February 2025

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