Latest / Quickly Quantum / Ep 7: Is Quantum's $12.6B Boom a Bubble or a Breakthrough?
Transcript
- Here's a question worth sitting with: when the money funding a technology starts moving a lot faster than the physics underneath it, is that the sign of a bubble about to pop, or the sign of a breakthrough about to arrive? That tension is the whole show today. On Quickly Quantum: is quantum computing's investment boom the real thing, or is it dot-com-era froth wearing a lab coat? We've got a newly public company that told its own investors, in writing, that its technology might never pan out commercially. We've got a three-month-old startup that raised three hundred million dollars on a single theoretical paper with no working machine behind it. And we've got a stock sell-off and a government equity stake, all colliding in the same handful of weeks. Welcome back to Quickly Quantum, your daily brief on the quantum frontier. It's Sunday, July 12, 2026, and today we're doing something different — one subject, the whole episode. Let's get into it. Quick refresher, because we've actually touched every piece of this story already, just one at a time. On July sixth, we covered IQM going public on Nasdaq and the McKinsey investment numbers. On July seventh and again on July eleventh, we covered the White House's two-billion-dollar quantum incentive package and the objections to it. On July eighth and July tenth, we covered Oratomic's three-hundred-million-dollar raise and its ten-thousand-qubit claim. And on July eighth, we covered IonQ's stock sliding on valuation jitters. Each of those, we told you as its own discrete story. What we haven't done is put them on the same table and ask what they add up to. That's today's job. So here's the shape of it. Quantum computing spent roughly two decades as a science project, funded mostly by governments who were patient because nobody expected a payoff soon. That changed hard, and fast, in 2025. According to McKinsey's Quantum Technology Monitor, private investment in quantum start-ups hit twelve point six billion dollars last year — that's six point three times what it was in 2024 — with ninety percent of it going specifically into quantum computing companies. And here's the flip side of that same coin: the share of quantum funding coming from governments collapsed, from about a third of all funding in 2024 down to just three percent in 2025. At the same time, on the public markets, the pure-play quantum stocks — IonQ, Rigetti, D-Wave — are trading at multiples that dwarf even the biggest dot-com winners, despite barely any revenue to speak of. IonQ's market cap, for instance, sits above twenty-one billion dollars against roughly a hundred and eighty-seven million dollars in trailing revenue, and seven hundred eleven million dollars in EBITDA losses — losses, not profits, on the books actually generating the cash flow. And the government didn't stay on the sidelines either. Back in May, the Commerce Department announced two point zero one three billion dollars in incentives spread across nine quantum companies — and, unusually, took what it called a minority, non-controlling equity stake in each company as a condition of the money, with IBM's new Anderon foundry venture alone worth two billion dollars. Layer on top of all that: Oratomic. A company that's all of three months out of stealth mode, with zero working fault-tolerant quantum computer to show anyone, raised three hundred million dollars from serious venture names — on the strength of a theoretical paper arguing that a useful, code-breaking-scale quantum computer might need only ten to twenty-six thousand physical qubits, not the millions the field has assumed for years. So is this a tipping point or a bubble? Let's start with the bull case, because it's the one driving the headlines. McKinsey's own read on its numbers is that 2026 marks a genuine commercial turning point — that quantum has graduated from a research curiosity into an actual boardroom conversation. Their report points out that more than three hundred companies are now actively collaborating with quantum firms, and it projects quantum revenue reaching four point four billion dollars by 2028, with the technology's total economic value landing somewhere between one point three and two point seven trillion dollars by 2035. That's the case for real capital following real technical progress, not just vibes. Now, the bear case. And it's blunt. Wall Street skeptics — the Motley Fool's analysts among them — argue this is structurally the same story as the dot-com bubble: prices set by narrative and social momentum, not fundamentals, that crater the moment reality shows up. One analyst pointed out that IonQ, Rigetti, and D-Wave are trading at price-to-sales ratios well above what was normal even for the flashiest dot-com darlings — higher, in fact, than eBay's peak multiple of a hundred and forty-four times sales, and eBay at least had an actual, profitable business. Another flagged that same IonQ number from a second angle: a market cap over twenty-one billion dollars sitting on top of a hundred and eighty-seven million in revenue and seven hundred eleven million in EBITDA losses. That's not a company being valued on what it makes. That's a company being valued on what it might someday become. Here's what strikes me sitting between those two arguments: they're not actually contradicting each other on the facts. McKinsey's not wrong that the money quadrupled — sextupled, really, six point three times — in a single year. The bears aren't wrong that the price-to-sales math doesn't remotely resemble a normal company. The disagreement is entirely about what that combination means. McKinsey reads it as capital finally catching up to real progress. The bears read the exact same chart as capital running ahead of it. And the honest answer is: you can't tell which one is right from the investment numbers alone — you can only tell from what the machines can actually do, which is a much slower-moving story than the funding rounds suggest. Now here's the part of this story I find genuinely remarkable, and it's not a bear or a bull talking — it's the company itself. IQM, Europe's first publicly traded pure-play quantum company, put this sentence directly into its own SPAC prospectus: quote, 'large-scale commercial traction of quantum computing technology may never occur,' end quote. Think about that for a second — a company asking the public for money, admitting in the actual legal document that its core product might just never work out commercially. And the market seemed to notice: despite listing at a one point nine billion dollar valuation, IQM's shares didn't pop on debut — they spent most of the day trading below the IPO price. That's not the reaction of a market that's fully bought in. Now flip to the other end of the spectrum: Oratomic. Three months out of stealth, no working device, and its venture backers — names like ARCH Venture Partners, Khosla Ventures, and Spark Capital — put down three hundred million dollars anyway. Their argument isn't crazy, though — it's specific. The claim rests on new error-correction theory suggesting a reliable logical qubit — that's an error-corrected qubit built from many imperfect physical ones — might require something like five physical atoms to encode, down from roughly a thousand in older estimates. Stack that improvement up, the argument goes, and a genuinely useful, code-breaking-scale quantum computer might need only ten to twenty-six thousand physical qubits total, instead of the millions the field has quoted for years. And it's not purely theoretical hand-waving — Oratomic's co-founder, Manuel Endres, has already demonstrated arrays holding roughly six thousand trapped atomic qubits, so the raw hardware scale isn't science fiction. But notice the gap between those two stories. IQM is a company with actual working hardware, actual customers, actually going public — and its own lawyers made it write down that the payoff might never come. Oratomic has no working device at all, and three hundred million dollars of very smart money is betting on a paper. That's the entire bubble question in miniature: the company with the most proof is the most cautious, and the company with the least proof just raised the biggest single check of the week. Then there's the government, and it's not sitting outside this market anymore — it's inside it, writing checks. Commerce Secretary Howard Lutnick framed the two-billion-dollar incentive package, and the equity stakes that came with it, as part of, quote, 'leading the world into a new era of American innovation,' end quote. And the industrial-policy logic underneath that is coherent, honestly: one market analyst put it well, arguing that the Commerce Department doesn't hand out two billion dollars in equity-linked grants when it thinks a technology is still a curiosity — it does so when it believes the curiosity is about to become an industry, a weapon, or both. Treat quantum like semiconductors or rare earths, in other words: too strategically important to leave entirely to venture capital and foreign competitors. Except — Congress isn't on board with how it happened. Representative Zoe Lofgren argued directly that this wasn't what CHIPS Act money was for, saying, quote, 'the Congressional record is quite clear that Congress did not want the government taking equity stakes in companies using these funds,' end quote. That's not a minor procedural gripe — that's an elected lawmaker saying the executive branch used research funding for something Congress specifically didn't authorize, picking nine winners without a transparent competitive process. And then there's a third problem, one that undercuts everybody's numbers at once: can we even trust the twelve point six billion dollar figure that's driving half of this narrative? An independent critique from postquantum.com pointed out that McKinsey's own footnotes admit the real number is probably higher, because — in the report's own words — data availability on start-up investment in China is limited. So the headline figure everyone's quoting, including me a minute ago, is directionally right but not precisely knowable. And the critique goes further, warning that big round numbers like this can become self-fulfilling: a CEO sees twelve point six billion and panics about missing out, an investor sees the growth rate and panics about being left behind, and that fear itself becomes the thing driving the next round of investment — independent of whether the underlying physics earned it. So you've got industrial policy that might be smart strategy or might be an unauthorized expansion of executive power, layered on top of a headline investment number that even its own authors admit is a rough estimate. Nobody in this story is lying, exactly. But nobody's got a clean, verified picture of the thing they're all reacting to, either. So where do I actually land on this, after laying out all these sides of it? Here's my read. I don't think this is a clean bubble in the dot-com sense, and I don't think it's a clean tipping point either — it's both, stacked on top of each other, and the trick is knowing which layer you're looking at. The McKinsey numbers on enterprise engagement — three hundred plus companies actively collaborating with quantum firms — that part feels real to me, because that's businesses spending their own budgets on pilots, not investors chasing a narrative. That's slow, boring, believable progress. But the public-market valuations — IonQ at twenty-one billion plus against under two hundred million in revenue — that part is priced on a story about the future, not the present, and stories about the future are exactly what popped in 2001. Those are two different markets wearing the same ticker symbols, and I think a lot of the bubble argument and the tipping-point argument are just people looking at different halves of the same chart and mistaking it for one thing. Oratomic is the piece that worries me most, honestly, and here's why: three hundred million dollars is now riding on a theoretical paper from a company with no working device, three months out of stealth. The underlying physics — cutting the atoms-per-logical-qubit ratio way down — is genuinely exciting if it holds up experimentally. But right now it's a paper being treated, by a lot of very smart capital, like it's already validated science. That's not how physics works. That's how narratives work. And the government wedge concerns me for a different reason — not because industrial policy is inherently bad, but because taking equity stakes in nine companies before the technology has proven out anything effectively lets Washington pick winners the market hasn't picked yet. If one of those nine stumbles, that's not just an investor losing money — that's a headline about the government losing money, which changes the politics of every quantum dollar that comes after it. Time for the Hype Check. And because this is the whole episode, I'm going to Hype Check the entire premise, not one story. I'm putting this at a five. The technical progress underneath all this — the error-correction theory, the enterprise pilots, the real engineering — that part is legitimate and it's moving. But the money is moving at a speed the physics hasn't earned yet, and when a three-month-old company with no hardware can raise three hundred million dollars on a single paper, that's not disciplined capital following progress — that's capital front-running a result that hasn't happened yet. Real science, real money, badly mismatched pacing. That's a five. So here's what I'm actually watching from here. First: does Oratomic's ten-thousand-qubit thesis survive contact with an actual working device — or is a theoretical figure from a company barely out of stealth quietly getting treated as settled science just because the check was big? Second: sixty percent of last year's quantum deal volume concentrated in just ten megadeals. Does that concentration make the sector more resilient, because the smart money is converging — or does it make a shakeout more likely, because one of those ten bets going bad takes a huge chunk of the market's confidence down with it? Third: does government equity in nine different quantum companies distort the competitive signals the market would otherwise send on its own — effectively crowning winners before the technology has proven anything? And fourth, the one that undercuts the other three a little: can anyone actually measure this surge accurately in the first place, when McKinsey's own footnotes admit the China data just isn't reliably knowable? These aren't questions with clean answers today. They're the ones I'll be tracking all year, and they're exactly the kind of thing that turns a headline number into either a great call or a very expensive mistake. If an episode like this one is useful — the kind that connects the dots across a whole week of stories instead of just listing them one at a time — that's the whole reason this show exists. So follow it wherever you're listening, and if you've got a minute, a rating genuinely helps more people find it. That's Quickly Quantum for today. New episodes every day. This is an AI-voiced podcast, created and built by a real person using today's cutting-edge technology. And remember: nothing on this show is financial advice. I'm Brian Lampert — see you tomorrow.