Quantum supremacy is the point at which a quantum computer can solve a problem that is practically impossible for the most powerful classical supercomputers to solve in any reasonable time.
Multiple optimistic projections suggest useful advantage of Quantum supremacy within next 2-3 years.
At Torch Investment Labs, we have conducted our analysis and believe that practical quantum supremacy; where quantum computers supersede classical computers to an extent that will make modern encryption obsolete is still at least 5-7 years away, if not more.
Torch Observations
- Still in early R&D phase: Many quantum firms are still pre-revenue, often relying on grants or partnerships to sustain operations and incurring huge amounts of R&D Costs.
- Solves specialized problems as of today: Quantum computers are not universally faster than classical machines. Their advantage lies in very specific problems like molecular simulation, risk optimization in banks, etc.
- Faces technological challenges: Today’s systems face several issues, high error rates, scalability hurdles, and significant infrastructure costs. To break modern encryption methodologies (equivalent to RSA 2048), it would require at least ~5000 qubits, whereas the most powerful machines today only have ~1000 qubits coupled with high error rates.
- Still an early stage, high-risk investment: Whilst the field has enormous promise, has limited number of listed companies, we believe it is imperative to track developments rather than commit heavily at this stage.
What is Quantum Computing?
At the heart of every classical computer lies a bit, the smallest unit of information, which can be either a 0 or a 1.
Quantum computing introduces a radical shift. Instead of bits, it uses qubits : quantum bits which can exist as 0, 1, or a superposition of both at the same time.
A simple analogy: Imagine trying to unlock a suitcase with a 3-digit code.
A classical computer tests each combination one by one, whilst a Quantum Computer can explore many combinations simultaneously. This ability to process vast possibilities in parallel is what makes quantum computing powerful.
Classical Computing vis-à-vis Quantum Computing
The Quantum Benefit
- Massively parallel computational power
Classical Computer with n bits: One math operation on 2n numbers requires 2n steps
Quantum Computers with n qubits: Same operation on 2n numbers takes just 1 Step
•A 64-bit classical computer can perform operations on 64-bit binary numbers at a time
•A 64-qubit Quantum Computer = 264 dimensions or 1.8*1019 numbers at one time
Thus, Quantum computers = Speed, Complex data handling & Optimization
Challenges in Quantum Computing Today
While the promise is enormous, today’s quantum computers are still in their early innings
1. Decoherence and Error Rates: Qubits are fragile. They lose their quantum state in microseconds, leading to errors in calculations. Error correction methods exist but are not yet scalable.
2. Cryogenic Temperatures: Many quantum systems must operate near absolute zero, demanding highly specialized infrastructure.
3. Less Scalability: Adding more qubits increases the instability of the quantum computer. Thus, most machines today operate in the tens or low hundreds of qubits, far from the millions needed for practical, error-corrected applications.
4. Cost and Commercialization: Most of the quantum firms are exploring a way for commercialization and rely on grants. The path to profitability is still forming.
| Technology | Description | Publicly Listed Companies | Private Companies |
| Superconducting Qubits | Use superconducting circuits cooled to near absolute zero. Fast and mature but prone to decoherence. | IBM, Rigetti, D-Wave | IQM, Oxford Quantum Circuits |
| Trapped Ions | Use charged atoms trapped in EM fields | IonQ, Quantinuum | Oxford Ionics, Alpine Quantum, eleQtron |
| Photonic Qubits | Use photons (particles of light) for qubit representation. Operate at room temperature, ideal for networking | – | PsiQuantum, Xanadu, Quandela |
| Spin Qubits | Use the spin of electrons or nuclei in materials like silicon or diamond | – | Quantum Brilliance, Photonic Inc |
| Neutral Atoms | Uncharged atoms held in optical tweezers | – | PASQAL, QuEra, Atom Computing, Infleqtion |
Investment Implications
- Pre-Revenue Stage: Most quantum computing companies remain pre-revenue, relying heavily on grants, partnerships, or government support.
- No Clear Winner: Multiple approaches; superconducting, trapped ions, photonics, neutral atoms, and spin qubits are being pursued. Each carries strengths and challenges, and no single model has emerged as the definitive path forward.
- High Valuations: Despite limited commercial revenues, consensus valuations are elevated, reflecting strong expectations rather than near-term fundamentals.
- Monitoring this space is imperative: While the technology shows clear strengths and transformational potential, we believe it is prudent to track developments rather than commit heavily at this stage.
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