Quantum computing the next technological revolution?

Have you ever wondered how a computer works? As difficult as it may be to imagine, almost every digital technology we use is ultimately built on a sequence of just two numbers 1 and 0. Binary code is the language that underpins virtually every digital device, from the computer you’re reading this article on to a video game or an Artificial Intelligence (AI) model.

To put it simply (computer scientists, forgive us), computing relies on a basic grammar. Every 0 or 1 represents whether a switch inside the processor is off or on. By combining these sequences according to fixed logical rules, billions of times over, computers transform strings of zeros and ones into words, calculations and images. The brilliance of this system lies in its simplicity reducing everything to just two possible states – on or off – has made computers easier to build, miniaturise, replicate and manufacture, enabling the digital revolution to spread across the world.

But that same simplicity is also its limitation. However fast a classical computer may be, it still evaluates one possibility at a time. When faced with extraordinarily complex problems, such as simulating a molecule or optimising a vast logistics network with countless possible combinations, even today’s most powerful supercomputers begin to struggle.

This is why a new generation of machines aims to rewrite the rules entirely quantum computers, one of the most promising frontiers of today’s technological revolution.

The geopolitical race for quantum computing

The world’s major powers know they cannot afford to be left behind. On 22 June, US President Donald Trump signed two executive orders making quantum research a national priority.

The first, Ushering in the Next Frontier of Quantum Innovation, launches a federal initiative to build a large-scale quantum computer capable of accelerating scientific discovery. The system is expected to be delivered to a laboratory within the US Department of Energy, with White House Science and Technology Director Michael Kratsios indicating 2028 as a possible target.

The second executive order, Securing the Nation Against Advanced Cryptographic Attacks, addresses the other side of the equation. A sufficiently powerful quantum computer could eventually break the encryption that protects banks, critical infrastructure and classified government information. As a result, federal agencies have been instructed to migrate to post-quantum cryptography by the end of 2030 for critical systems and by the end of 2031 for digital signatures.

Earlier this year, the administration had already committed around US$2 billion through the CHIPS Act, allocating US$1 billion to IBM for a dedicated semiconductor foundry, US$375 million to GlobalFoundries, and US$100 million each to emerging quantum companies including D-Wave, Rigetti, Infleqtion, PsiQuantum and Quantinuum, in exchange for minority, non-controlling equity stakes.

Driving Washington’s efforts is an increasingly intense technological rivalry with China. Beijing has placed quantum technology at the top of the seven “industries of the future” identified in its 15th Five-Year Plan (2026–2030), shifting the focus from research towards commercialisation. Public procurement, manufacturing subsidies and a National Venture Guidance Fund have channelled more than 120 billion yuan into three dedicated regional quantum hubs.

Estimates of China’s total public investment vary, but several sources place it at around US$15 billion – several times larger than US federal spending. The results are already beginning to emerge. China’s photonic quantum computer Jiuzhang 4.0, presented in Nature, reportedly solved a benchmark computational problem at a speed beyond the reach of any classical supercomputer.

The United States, by contrast, has adopted a different strategy a decentralised ecosystem of universities, national laboratories, hyperscalers and more than 40 private companies, where private capital acts as the engine while public funding provides the fuel.

The logic behind Trump’s executive orders is clear quantum technology has become a strategic national priority.

The opportunity is enormous and, in both the US and China, governments are increasingly willing to invest directly alongside private capital. Washington has acquired minority stakes in nine quantum companies, while Beijing is deploying public funds estimated at around US$15 billion.

Europe, meanwhile, is taking a different approach. Rather than acting as a shareholder, it has focused primarily on grants, research programmes and coordination. The numbers highlight the challenge. Despite remaining a global scientific leader – Europe produces more quantum research publications than any other region and is home to roughly one-third of the world’s quantum companies – it attracts only around 5% of global private investment in quantum technologies, compared with more than 50% flowing to the United States.

Brussels responded with the Quantum Europe Strategy in July 2025 and is preparing a Quantum Act, aiming to make the European Union a global leader by 2030, in a sector expected to be worth more than €155 billion globally by 2040.

However, the strategy brings little new funding. Instead, it seeks to coordinate the €11 billion already invested over the past five years – investments that have produced world-class scientific research but have yet to translate into commercial leadership.

Europe also continues to face familiar structural challenges dependence on critical components sourced outside the EU, such as cryogenic systems and lasers, fragmentation across its 27 Member States, and a long-standing shortage of risk capital.

Against this backdrop, the latest US Executive Orders encourage allied nations to coordinate on export controls and investment screening. For Europe, however, the greater risk may be an accelerating brain drain as talent and capital continue to gravitate towards the United States, where most private investment is concentrated.

What is quantum computing, and why does it matter?

In a way, it all began with a blackboard. In 1981, Nobel Prize-winning physicist Richard Feynman made a groundbreaking observation during a conference nature itself is governed by strange and elusive laws, and simulating it accurately would require more than an ordinary computer. Instead, we would need a machine capable of speaking nature’s own language.

A few years later, in 1985, David Deutsch at the University of Oxford transformed that idea into a formal theory, introducing the concept of a universal quantum computer. For decades, the idea remained confined to academic conferences and the pages of science fiction novels. Today, however, the prospect of fully functional quantum computers appears closer than ever.

But how does a quantum computer actually work? Traditional computers process information using bits tiny switches that can only exist in one of two states, 0 or 1, on or off. Quantum computers replace these with qubits, which exploit the strange properties of quantum mechanics.

In simple terms, instead of evaluating one possibility at a time, a quantum computer can explore an enormous number of possibilities simultaneously.

That is precisely why technology matters. Some of today’s most important computational problems are so complex that they overwhelm even the world’s fastest supercomputers. Finding the optimal route across a delivery network with thousands of destinations, modelling the risk of a financial portfolio, or simulating the behaviour of molecules for new drug development are all problems where nature itself behaves according to quantum mechanics, making classical computers increasingly inefficient.

A sufficiently advanced quantum computer could solve these types of calculations far more efficiently, with potentially transformative applications across industries including pharmaceuticals, materials science, energy, logistics and Artificial Intelligence.

Yet this extraordinary computing power also has a darker side. A mature quantum computer could eventually break the encryption that currently protects banks, governments and critical infrastructure. Within the cybersecurity community, the moment when a quantum computer becomes capable of breaking today’s most widely used cryptographic algorithms is known as Q-Day, or Quantum Day.

So, how far away are we? Caution is still warranted. Today’s quantum computers contain anywhere from a few hundred to a few thousand physical qubits, but they remain highly error-prone. Most experts believe that truly useful, fault-tolerant quantum computers are unlikely to arrive before the end of this decade, and possibly much later.

For now, several years of engineering challenges still separate today’s prototypes from commercially viable systems. Nevertheless, an entire ecosystem of companies is investing heavily in the technology. On one side are the major technology companies – IBM, Google, Microsoft, Amazon, as well as China’s Origin Quantum – which incorporate quantum research into already profitable businesses and cloud computing platforms. Their financial strength allows them to pursue multiple technological approaches simultaneously while investing over long time horizons.

Alongside them is a growing group of pure-play quantum companies, whose sole focus is developing quantum computing technologies. These include IonQ and Quantinuum (trapped ions), Rigetti and D-Wave (both using superconducting circuits, albeit with different approaches), PsiQuantum and Xanadu (photonic quantum computing), and France’s Pasqal, which specialises in neutral-atom quantum computers.

Bringing these two worlds together is a growing network of partnerships, government contracts, acquisitions and stock market listings. IonQ recently agreed to acquire Oxford Ionics in a deal worth more than US$1 billion, while Quantinuum is widely expected to pursue a public listing in the near future.

Should you invest? The core-satellite approach

Like many emerging technologies, quantum computing is attracting growing interest from investors at every level.

There are certainly reasons to be optimistic. Strong, long-term government support on both sides of the Atlantic and the Pacific significantly reduces the risk that the industry will be left without funding. The addressable market is vast, with potential applications spanning pharmaceuticals, chemicals, finance and many other sectors. Revenues, while still relatively modest, are growing steadily.

At the same time, investors should remain realistic. Most companies in the sector are still far from profitability. Valuations often remain disconnected from underlying fundamentals, and it is still far from clear which technology – or which company – will ultimately emerge as the winner. In other words, the industry’s future leaders have yet to be identified.

Investing in emerging technologies can be an attractive long-term strategy, but it often involves greater uncertainty than many investors realise. History shows that markets frequently overestimate the speed at which breakthrough technologies are adopted and commercialised.

That does not mean investors should avoid these opportunities altogether. Instead, the key is gaining exposure while keeping risk under control. One way of doing this is through the core-satellite approach used in our thematic investing portfolios.

This strategy allows you to complement the core of your portfolio with the megatrends you believe have the greatest long-term potential, while maintaining broad diversification across asset classes and investment themes.

By combining a well-diversified core portfolio with carefully selected thematic investments, you can seek additional long-term growth opportunities without relying on the success of any single technology or company.

We continuously monitor the companies that make up the megatrends within your portfolio, rebalancing exposures where necessary to ensure your investments remain aligned with your long-term objectives and your attitude to risk.

Please remember that when investing, your capital is at risk. The value of your portfolio with Moneyfarm can go down as well as up and you may get back less than you invest. Past performance is not a reliable indicator of future performance. The views expressed here should not be taken as a recommendation, advice or forecast. If you are unsure investing is the right choice for you, please seek financial advice.