The Next Transformational Frontier After AI: Quantum Computing

I’m definitely no expert in quantum computing or physics. I'm just someone who’s generally very curious and a decent reader, with a knack for piecing together and interpreting information as I go along. Over the past few months, I’ve been steadily drawn into the world of quantum computing. The more I read, the more it feels like something that’s quietly working its way from research labs into the broader conversation about where technology is headed. Additionally, quantum physics is strange. Really strange.

Unlike some tech buzzwords that come and go, quantum computing will have staying power. It offers potential advantages not just in crunching numbers faster, but also in giving us new ways to understand the natural world at its smallest scales. Governments are investing heavily, businesses are exploring early opportunities, and investors are taking careful, early steps into the market. While it’s still an emerging field, full of unknowns and a good deal of hype, it’s worth exploring what quantum computing is, why countries are so keen to lead in this area, and how it might change the way we think about security, commerce, and the fundamental building blocks of reality.

Structure of the Note

Quantum Computing for Dummies
The Race Between Super-Powers
The Investment Perspective

Quantum Computing for Dummies

Quantum is not only a slap-stick standard word used in sci-fi movies for stuff they can't rationally explain. At the heart of it, quantum computing are these units called “qubits”, which is short for quantum bits. Imagine the standard bits in your laptop: they’re pretty straightforward, as they are either a 0 or a 1. You can see how many total bits your classical computer has by going to the control panel.

Device specifications for my laptop in the control panel.

Qubits, on the other hand, can be both 0 and 1 at the same time thanks to the strange rules of quantum mechanics. Think of it like spinning a coin in mid-air before it lands, except the coin could stay spinning, showing both heads and tails, as long as the coin's environment doesn't interfere with it. This is what is called a "superposition" when talking about quantum computing.

This ability lets qubits handle multiple possibilities in parallel, potentially solving certain problems much faster than classical bits can. Qubits can also become entangled, meaning their states stay closely linked even when they are very far apart, allowing them to work together in ways that no classical system can match.

When you have just one qubit, it can hold two possibilities at the same time: 0 and 1. But when you add more qubits, the number of possibilities grows exponentially.

For example:

1 qubit: 2 possibilities (0 and 1).
2 qubits: 4 possibilities (00, 01, 10, 11).
3 qubits: 8 possibilities (000, 001, 010, 011, 100, 101, 110, 111).

By using many entangled qubits, a quantum computer can process all these possibilities simultaneously, which is why it can solve certain problems much faster than classical computers.

Think of it like solving a maze: a classical computer tries one path at a time, but a quantum computer explores all paths at once!

Schrödinger's Cat and a Qubit's Superposition

In the thought experiment of Schrödinger’s cat, opening the box and observing the system forces the wave function to collapse, fixing the cat’s fate in one definite state. This interplay between measurement and quantum states defies everyday intuition, suggesting that what we recognize as “real” may only emerge once we interact with the system. In other words, the act of observing itself can “choose” an outcome from a cloud of quantum possibilities.

Yet observation isn’t the whole story. Even without a direct observer peering inside, the environment plays a subtle but crucial role. Tiny, seemingly insignificant interactions of light photons, air molecules, or other forms of “noise”, gradually erode the delicate superposition of quantum states. This process, known as decoherence, steadily pushes the system out of its strange, in-between condition and into a single, stable outcome. As a result, Schrödinger’s cat isn’t just a puzzle about measurement; it’s also a reminder that the world we see, the solid, reliable reality we trust, is shaped by both our acts of observation and the constant influence of the environment gently steering quantum possibilities toward familiar, classical territory.

Quantum computing’s extraordinary capabilities rely on coherent control, a method of driving qubits between “0” and “1” by using precisely tuned radio-frequency or microwave pulses. These pulses trigger what is known as the Rabi effect, described by Rabi (1937), in which an oscillating magnetic field interacts with atoms or molecules and nudges them to transition between quantum energy states. By carefully selecting the frequency and duration of each pulse, researchers can manipulate qubits with remarkable finesse, enabling operations that are impossible in classical computing.

Beyond quantum computation, the Rabi effect also underpins the science of nuclear magnetic resonance (NMR) and magnetic resonance imaging (MRI), crucial tools in fields such as chemistry and medicine (Filler, 2009). Thanks to this universal principle, we can both map the structure of molecules within living organisms and harness delicate quantum states for powerful computation. Layered on top of this control are quantum logic gates, which work like instructions in a quantum program (Nielsen and Chuang, 2010). Among these, the Hadamard gate creates superpositions by placing a single qubit in a balanced combination of “0” and “1,” while the CNOT gate flips a target qubit conditionally, depending on another qubit’s state. In classical computing, gates like AND, OR, and NOT perform deterministic operations on bits (0 or 1). Quantum logic gates, however, can create and manipulate superposition and entanglement. These are two phenomena that are uniquely quantum. These capabilities allow quantum computers to perform many calculations simultaneously, enabling them to solve certain problems exponentially faster than classical computers. I will not go into the math or more detail of how the gates logic gates in quantum computing works, mostly because there is far more material out there if you want to do a little deep-dive in this area.

While the Rabi effect is universal, companies take different hardware routes to realize it. IonQ ($IONQ) employs trapped-ion technology, using electromagnetic fields to suspend charged atoms and control them via laser pulses. This approach can maintain coherent qubit states for comparatively long durations, although scaling up to large numbers of ions involves significant engineering challenges.

In contrast, other actors leverages superconducting qubits, which are formed by tiny loops of superconducting material maintained at extremely cold temperatures. These qubits, driven by microwave pulses, exhibit the same Rabi-based oscillations as trapped ions but are fabricated on chips that resemble those used in the semiconductor industry. The potential for scalable on-chip integration is a key attraction of this approach.

Google’s ($GOOGL) Sycamore use these superconducting qubits, relying on microwave pulses to achieve coherent control (Arute et al., 2019; IBM, n.d.). By coupling qubits through resonators and carefully engineering their interactions, these platforms can implement quantum logic gates such as Hadamard and CNOT, just like IonQ. Despite their differing hardware designs, all of these technologies depend on the Rabi effect to steer qubits toward complex quantum operations, illustrating that multiple paths can lead to the same underlying goal: unlocking the immense computational advantages of the quantum realm.

The Quantum Race Between Super-Powers

Quantum computing is no longer confined to academic research or science fiction. It is now at the center of a high-stakes geopolitical race, with nations like the United States and China pouring billions into this technology.

The reason is simple: quantum computing holds the power to transform industries, redefine economies, and disrupt the balance of global power. While its potential for good is immense, with breakthroughs in medicine, energy, and material science, it also carries a "dark" side that threatens to upend modern encryption and national security.

The Encryption We Rely on Today

To understand why quantum computing is such a game-changer, let’s first look at the encryption systems that underpin modern communication and commerce. One of the most widely used systems is RSA encryption, which relies on the mathematical difficulty of factoring large numbers. In this system, two large prime numbers are chosen and kept secret. These primes are used to generate two keys: a public key, which is openly shared, and a private key, which remains confidential. The public key is used to encrypt data, while the private key is required to decrypt it.

The security of RSA encryption lies in the fact that, while it is easy to multiply the two prime numbers to create the public key, it is computationally infeasible to reverse the process and deduce the original primes from the public key. For example, imagine two prime numbers, such as 17 and 31, are multiplied to create the number 527. If someone only knows the product, 527, they would need to reverse-engineer the factors, finding 17 and 31, to decrypt the information. For small numbers, this is trivial. But RSA keys use numbers that are hundreds of digits long, making the problem exponentially more complex.

A 2048-bit RSA key involves a number so large, about 617 digits, that factoring it using classical computers would take trillions of years, even with the fastest algorithms available. To put this into perspective, consider a classical computer testing all possible factors. Suppose it could check one trillion combinations per second. For a 617-digit number, there are approximately 10^308 potential combinations. At one trillion checks per second, the computer would take more than 10^289 years to find the factors, a time frame so vast it far exceeds the age of the universe.

This difficulty in factoring is what keeps today’s encryption secure.

However, quantum computers operate fundamentally differently. By leveraging principles like superposition and entanglement, quantum computers can, as previously mentioned, explore multiple possibilities simultaneously. Shor’s Algorithm, a quantum algorithm specifically designed for factoring large numbers, can solve these problems exponentially faster. With a sufficiently powerful quantum computer, what would take trillions of years for a classical computer could be solved in minutes. This is why quantum computing poses such a significant threat to RSA and other encryption systems (MIT Technology Review, 2024). Consider your online banking transactions, which rely on RSA encryption. If a hacker intercepts your encrypted data today, they would be unable to decrypt it because it would require factoring an enormous number. However, a quantum computer using Shor’s Algorithm could solve this in a matter of minutes, rendering your encrypted data exposed. This is why companies like HSBC are already investing in quantum-resistant cryptography and secure communication methods like Quantum Key Distribution (Toiba Quantum Labs, 2024).

Quantum Computing Will Evolve Encryption, Not End It

The threat posed by quantum computers to modern encryption systems like RSA is real, but it does not mean the end of secure communication. Rather, it marks the beginning of a new era in cybersecurity. Just as quantum computers can break traditional encryption, the same principles of quantum mechanics can be used to create quantum encryption, which is far more secure and virtually unhackable.

One of the most promising approaches is Quantum Key Distribution (QKD). This technique uses the quantum property of superposition to encode information in particles of light, such as photons. The unique nature of quantum mechanics ensures that any attempt to intercept or measure the photons would disturb their state, alerting the sender and receiver to the intrusion. QKD has already been successfully tested in several real-world scenarios, such as secure communications between banks and government agencies (Toiba Quantum Labs, 2024).

In addition to QKD, researchers are working on post-quantum cryptography, which involves developing encryption algorithms resistant to quantum attacks. These methods rely on mathematical problems that are difficult even for quantum computers to solve, such as lattice-based cryptography or multivariate polynomial problems. As these algorithms are developed and implemented, they will provide robust defenses against quantum threats, ensuring that secure communication can continue in the quantum era.

The evolution of encryption in response to quantum computing will be one of the defining trends in the cybersecurity space over the coming decades. Companies and governments alike will invest heavily in quantum-safe solutions, creating a dynamic new frontier for innovation and competition. While the transition from current encryption systems to quantum-resistant methods will require significant effort, it ensures that the future of cybersecurity is not only secure but also adaptable to emerging threats.

United States vs China

The race for quantum supremacy is as much about geopolitical strategy as it is about scientific progress. The United States and China are leading this race, each with distinct approaches to achieving dominance.

United States: Private Sector Leadership

The United States strategy relies heavily on its private sector. Companies like IBM, Google, and IonQ are at the forefront of quantum development, supported by initiatives such as the National Quantum Initiative Act. IBM’s Quantum System One, for example, is a state-of-the-art machine capable of performing quantum calculations in an environment colder than outer space. This ultra-low temperature minimizes noise and helps maintain the fragile quantum states needed for computation (The Future with Hannah Fry, 2024).

IBM’s CEO, Arvind Krishna, has stressed the strategic importance of quantum computing, stating that it has been elevated to the same level of importance as military alliances and trade agreements. The U.S. approach emphasizes collaboration between government and private industry to ensure that quantum advancements stay aligned with national security goals.

China: Centralized Strategy

China, by contrast, has adopted a centralized, state-driven approach. The Chinese government has invested over $15 billion in quantum research, more than three times the U.S. budget. The 2016 launch of the Micius satellite marked a significant milestone, demonstrating quantum communication over distances far greater than what fiber-optic cables allow. This achievement positions China as a leader in secure quantum communications, laying the groundwork for a future quantum internet (Nature, 2024).

China also dominates in quantum patents, holding more than 50% of all patents globally. Its rapid progress reflects a strategic focus on integrating quantum technologies into national infrastructure, from secure banking systems to government communications.

3. The Investment Perspective

Quantum computing, though still in its infancy, has the potential to reshape entire industries in ways classical computing cannot. Its promise lies in tackling problems currently unsolvable, such as accelerating drug discovery, enhancing cryptography, optimizing supply chains, and transforming artificial intelligence. According to a 2024 report by Boston Consulting Group (BCG), the quantum computing market is projected to create $450 billion to $850 billion in economic value by 2040, sustaining a $90 billion to $170 billion market for hardware and software providers.

BCG's updated projections outline three distinct phases for quantum computing: the Noisy Intermediate-Scale Quantum (NISQ) era before 2030, the Broad Quantum Advantage phase between 2030 and 2040, and the Fault-Tolerant Quantum Systems era after 2040. In the NISQ era, revenue potential is estimated to be modest, around $1–$2 billion annually. By the Broad Quantum Advantage phase, quantum computing will begin solving complex problems, driving revenue between $15–$30 billion annually. The Fault-Tolerant Quantum era could deliver $90–$170 billion annually, transforming industries and offering unparalleled opportunities for investors (BCG, 2024).

Different Investment Exposures to Quantum Computing

Quantum computing companies can be understood within the framework of three distinct roles in the ecosystem: architects, integrators, and facilitators.

Architects, such as IonQ ($IONQ), Rigetti Computing ($RGTI), D-Wave Systems ($QBTS) and IBM ($IBM), are at the forefront of developing quantum hardware and algorithms. These companies represent the high-risk, high-reward side of the quantum landscape, as they are heavily focused on advancing the technology itself.

Integrators like NVIDIA ($NVDA) and IBM bridge the gap between quantum and classical systems, ensuring that businesses can begin using quantum technologies alongside their current setups (Investor’s Business Daily, 2025).

Facilitators, including Amazon Web Services and Google ($GOOGL), focus on providing quantum computing resources through cloud-based platforms, enabling broader access without requiring businesses to invest in quantum hardware themselves.

The Hybrid Era and a Potential “ChatGPT Moment” for Quantum

Much like the transformative impact that ChatGPT had on artificial intelligence in terms of public awareness and adoption, quantum computing is poised for its own watershed moment at some point in the coming years. Recent advancements, such as Google’s Willow processor, which can solve problems in minutes that would take classical systems billions of years, signal the technology’s potential. However, the road to widespread adoption will be gradual, with incremental milestones along the way.

The hybrid quantum-classical era will dominate the next decade, where quantum systems complement classical infrastructure rather than replace it outright. This phase provides an opportunity for companies like NVIDIA, IBM, and Google to establish themselves as essential players in the quantum ecosystem. For investors, this era represents a critical window to build positions in companies leading the charge (Investor’s Business Daily, 2025).

The Jensen Huang (NVIDIA CEO) Comments

Recently, the quantum computing sector experienced a sharp sell-off following comments by NVIDIA CEO Jensen Huang. During a Q&A session with analysts on January 8, 2025, Huang remarked that “very useful” quantum computers are likely 15–30 years away. His statement, while aligning with the industry’s cautious roadmaps, caused panic among investors. Smaller pure-play quantum companies like IonQ, Rigetti Computing and D-Wave Systems saw their stock prices plunge by more than 40% the day after.

However, Huang’s comments, when closely examined, do not signal a bearish outlook on quantum computing. Instead, they emphasize the critical role of hybrid quantum-classical systems in the coming years. NVIDIA has positioned itself as a leader in this intermediate phase, leveraging its GPUs to accelerate quantum simulations and computations. Huang himself noted, “NVIDIA is the biggest company in quantum computing that doesn’t make quantum computers,” underscoring the company’s role in supporting the industry’s development.

Some investors misinterpreted Huang’s remarks as a reason to exit the sector, but I view them as a reinforcement of quantum’s long-term potential. Huang’s vested interest in maintaining NVIDIA’s dominance in classical computing likely influenced his cautious tone. NVIDIA’s strategy revolves around profiting from the hybrid era, where quantum computers work alongside classical systems, i.e a period that benefits NVIDIA’s core business. While Huang’s timeline may seem conservative, it aligns with most industry roadmaps and underscores the importance of patience and strategic positioning in this space. Let's also not forget that he's speaking with the business interests of NVIDIA in mind. He's not an independent party, so to say..

The Bigger Picture: Why I’m Staying Invested

The recent extreme market volatility, with both parabolic stock price rises in Q4 2024, and the recent sell-off due to some comments by the NVIDIA CEO underscores the importance of a long-term perspective when investing in quantum computing. The people who jumped into the sector hoping for quick gains are the same ones who exited after one comment from Huang. However, for those who understand the broader implications of his remarks, it is clear that quantum computing remains a promising frontier. As Huang’s comments highlight, the hybrid quantum-classical era will be the foundation of this industry for years to come, and companies like NVIDIA are deeply invested in ensuring its success.

While quantum computing’s ultimate potential may take decades to realize, the journey will be marked by incremental breakthroughs that offer opportunities for patient investors. For me, staying invested means balancing the high-risk, high-reward potential of pure-play companies with the stability of part-play giants. By maintaining this diversified approach, I aim to capture the long-term value creation that quantum computing promises, even as the path forward remains uncertain.

My Balanced Investment Approach

Investing in quantum computing requires both patience and diversification. In my portfolio, I’ve adopted a balanced approach that combines speculative opportunities with more stable, long-term plays.

I’ve made small, calculated investments in pure-play quantum companies like IonQ. This is an example of a company that I believe is at the cutting edge of quantum technology, and while speculative, they hold the potential for outsized returns if quantum computing achieves significant commercial breakthroughs. The money allocated to these investments is what I call "willing to lose immediately" money, a small percentage of the portfolio, deliberately reflecting the high risk and uncertainty associated with this emerging field.

To balance this risk, I’ve have since long prior positions in part-play stocks like Microsoft ($MSFT), Amazon ($AMZN), as well as FormFactor ($FORM, a smaller, niche semiconductor company). These companies integrate quantum capabilities into their broader technology strategies, offering a more stable and diversified path to quantum exposure. Unlike pure-play companies, these tech giants are much less reliant on the immediate success of quantum computing, providing steadier, long-term growth potential.

This diversified strategy enables me to benefit from both the high-risk, high-reward nature of pure-play quantum investments and the incremental growth of established tech players shaping the quantum ecosystem. Over time, as the quantum landscape evolves, my investment allocations will adapt to reflect my updated views on the associated risks and opportunities, ensuring a strategy that grows alongside this transformative technology.

As always with investments, don't take rash decisions. Study, create conviction, and stay the course.

By J

References

Arute, F. et al. (2019) ‘Quantum supremacy using a programmable superconducting processor’, Nature, 574, pp. 505–510.
Filler, A. G. (2009) ‘The History, Development, and Impact of Computed Imaging in Neurological Diagnosis and Neurosurgery: CT, MRI, and DTI’, Nature Reviews Neurology, 5(6), pp. 329–343.
IBM (n.d.) IBM Quantum systems. Available at: https://www.ibm.com/quantum.
IonQ (n.d.) How It Works. Available at: https://ionq.com/how-it-works.
Nielsen, M. A. and Chuang, I. L. (2010) Quantum Computation and Quantum Information. Cambridge: Cambridge University Press.
Rabi, I. I. (1937) ‘On the Process of Space Quantization’, Physical Review, 51(8), pp. 652–654.
Rigetti (n.d.) How It Works. Available at: https://www.rigetti.com/how-it-works.
Boston Consulting Group (2024) ‘The Long-Term Forecast for Quantum Computing Still Looks Bright’. Available at: https://www.bcg.com.
MIT Technology Review (2024) ‘Breaking Encryption: The Threat of Quantum Computing’. Available at: https://www.technologyreview.com.
Toiba Quantum Labs (2024) ‘Quantum Key Distribution: Securing the Future’. Available at: https://www.toibaquantumlabs.com.
Nature (2024) ‘China’s Micius Satellite and Its Impact on Quantum Communication’. Available at: https://doi.org/10.1038/s41586-024-0001-9.
U.S. Department of Energy (2024) ‘National Quantum Initiative Act: Securing the U.S.’s Lead in Quantum Technology’. Available at: https://www.energy.gov.
Investor’s Business Daily (2025) ‘Quantum Computing Stocks Drop as NVIDIA CEO Comments’. Available at: https://www.investors.com.
Hyperion Research (2024) ‘Global Quantum Computing Market Spending Projections’. Available at: https://www.hyperionresearch.com.
Motley Fool (2024) ‘NVIDIA’s Quantum Strategy at GTC 2024’. Available at: https://www.fool.com.
HSBC Insights (2024) ‘Post-Quantum Cryptography: Preparing for a Quantum Future’. Available at: https://www.hsbc.com.

The Next Transformational Frontier After AI: Quantum Computing

Quantum Computing for Dummies