In recent years, investors in quantum computing have grown accustomed to hearing promises about a technology poised to transform the world of computing - a rapidly growing industry viewed as one of the most promising technological revolutions of the coming decade.
These are exceptionally complex and high-speed computers capable of solving problems that conventional computers either cannot address or would take an immense amount of time to resolve. In practical terms, this means the ability to solve highly complex problems, such as materials research, drug discovery, code-breaking, and intricate logistical optimization, in a short timeframe. These are tasks that could take even a typical supercomputer thousands of years to complete.
Yet, despite this immense technological promise, the past year has served as a sobering reminder for Wall Street investors. The potential inherent in quantum computing is still far from translating into major revenue. As a result, while the market celebrated the AI boom, quantum-related stocks were left behind.
From the beginning of 2026 through the end of September, shares of major companies in the sector plummeted. D-Wave’s stock fell by about 37%, Rigetti’s stock fell by 29%, and IonQ’s stock fell by 2%. Since its IPO in March, Xanadu has plummeted by more than 46%, while Infleqtion has fallen by about 5% since its SPAC merger in February.
However, over the past month, coinciding with the World Quantum Congress held in Maryland, there has been a shift, at least to some extent. IonQ’s stock recovered by 7% (even as others continued to lose ground). The question now looming over the markets is whether this marks the beginning of a trend reversal for stocks in a sector that has struggled to live up to expectations. Incidentally, for comparison, the Defiance Quantum ETF, which tracks stocks in this field (among others), has jumped 39% since the beginning of the year and through the end of September. Since the aforementioned conference, it has climbed a further 6%.
Proof in the real world Is required
Baptista Research analyst Ishan Majumdar believes that this past summer shifted investor psychology. He says, "Expectations have been significantly reset, and investors have become far more selective."
In an interview with MarketWatch, he explained, "A technological roadmap is no longer sufficient on its own." Today, he notes, the market is looking for clear evidence that laboratory progress is translating into systems with commercial utility and recurring revenue.
It is precisely at this juncture that a major shift has emerged from one of the world’s largest financial institutions. A comprehensive new report from Bank of America’s global thematic research team, led by strategist Haim Israel, describes quantum computing as "humanity’s next discovery of fire."
Bank of America characterizes the current period as a "ChatGPT moment on steroids," estimating that the timeline for commercial adoption is shortening dramatically, to the point where a "commercial quantum advantage" could potentially be achieved as early as 2027. The report also highlights a strong link between these two revolutions: quantum computing could provide the immense processing power required to train advanced AI models.
Who will reach a commercial advantage?
To understand why 2027 has been identified as a turning point, one must grasp the industry’s greatest technological bottleneck: errors. Quantum computers are highly sensitive to noise and environmental conditions. The ability to operate stable "logical qubits" - the fundamental unit of data in a quantum computer, analogous to a bit in a traditional computer, over extended periods, marks the dividing line between an experimental system and a commercial product.
This is where IonQ enters the picture, having recently unveiled a real-time quantum error decoder that runs on a standard CPU. The company announced that its Superion 256 system will be installed at chip giant Nvidia’s research center, and that it has begun accepting orders for delivery in 2027.
Rosenblatt Securities senior research analyst John McPeake identified the Superion 256, as well as Sol (Quantinuum’s fourth-generation computer, slated for release in 2027), as the top contenders to be the first to achieve a commercial advantage.
Meanwhile, the industry is shifting toward a risk-mitigation model based on hybrid computing. Rather than waiting for the perfect quantum computer to replace classical computers, companies seek to combine the two worlds to achieve "quantum advantage" - identifying economically viable applications and solving real-world problems.
Despite technological optimism, Wall Street’s primary concern remains the "burn rate" (the pace at which cash is consumed). Developing these systems, which involve complex cooling infrastructure, lasers, and superconducting chips, requires massive capital, while revenue generation remains slow.
Expectations and government funding High expectations are already priced into the valuations of the sector’s key players: IonQ is trading at a market cap of about $17.4 billion (and provides access to its systems via the cloud services of Amazon, Microsoft, and Google); D-Wave is trading at a market cap of about $6.7 billion; and Rigetti at roughly $4.9 billion.
Meanwhile, although D-Wave reported revenue of only $3.1 million for the second quarter, its order backlog for the first half of the year surged to $35.5 million (up from $2.9 million in the previous year) - an initial sign of a transition from promises to actual contracts.
Underpinning all of this is government funding. Bank of America estimates that government investment in the sector has surpassed the $58 billion mark, with Europe and China leading the way. In the US, a 68% increase is planned for the defense budget allocated to quantum technology (reaching $567 million), alongside billions more in state grants and funding from the CHIPS Act. On the other hand, China has established a national laboratory for quantum sciences with a massive $10 billion budget.
The threat that produces revenue
The most immediate implication of the quantum race lies in the realm of cybersecurity. Bank of America warns of "Q-Day" - the moment when quantum computers become powerful enough to crack the encryption standards currently in widespread use.
The post-quantum cryptography market (focused on safeguarding encryption against quantum computers), currently valued at approximately $300 million, is projected to surge to over $2 billion by the end of the decade (according to MarkNtel Advisors). Companies such as Symmatrics and Arqit are already introducing post-quantum security solutions designed to protect systems against the computers of the future.
Following several months in which quantum-related stocks took a significant hit, there is no clear market signal yet that the sector has entered a long-term trend reversal. However, the discourse surrounding the industry is shifting. There is less emphasis on grand promises regarding "the computer of the future," and more focus on error correction, partnerships with tech giants, government contracts, commercial clients, and applications with tangible, quantifiable monetary value. Analyst Craig Ellis of the investment bank B. Riley Securities wrote that Rigetti, D-Wave, IonQ, and Infleqtion could benefit from positive momentum, specifically noting announcements on additional federal support for the industry.
For investors, this is precisely the litmus test. Bank of America describes a market that could evolve into one of the decade’s major technology stories. Yet, in the public markets, these companies must still prove they can translate technological breakthroughs into revenue.
The path toward 2027 - a key benchmark year for the industry - depends on securing contracts and clients, delivering functional systems, and finding ways to fund the race without diluting existing shareholders. While the positive signal from September may not constitute the revolution itself, it arrives just as the market begins to ask, once again, whether that revolution is truly on the horizon.
Published by Globes, Israel business news - en.globes.co.il - on October 20, 2026.
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