The State of Quantum Computing: Trends, Challenges, and Opportunities according to Hyperion Research

At the recent SC24 show in Atlanta, Bob Sorensen from Hyperion Research delivered a breakfast briefing (slides here ) describing his take on the current state of quantum computing and how to navigate the changing advanced computing landscape. Quantum computing is at the center of intense research, investment, and strategic focus. While its practical applications are still emerging, the current landscape reveals significant strides in market growth, workforce development, and hybrid computing integration. This blog post synthesizes insights from this presentation and complementary perspectives to explore the multifaceted value of quantum computing today and its trajectory for the future.

The Evolving Advanced Computing Landscape

The advanced computing ecosystem is experiencing transformative shifts, with quantum computing poised to play a critical role in the next few years. According to Hyperion Research, quantum computing is just 3-4 years away from delivering transformative value across industries, making it a key focus alongside other emerging trends such as AI and edge computing. This convergence of technologies is reshaping the computational landscape in significant ways:

• The Rise of Generative AI: Generative AI models, including large language models (LLMs), are driving explosive growth in compute requirements, with AI-centric GPUs and accelerators dominating processor design. Quantum computing is positioned to complement AI by offering novel approaches to optimization and enhancing large-scale training workflows.
• Edge Computing and Real-Time Decision Making: The expansion of edge computing, which supports real-time processing at data collection points, aligns with quantum’s potential to revolutionize tasks such as optimization and decision-making. As edge systems advance, the integration of quantum-enhanced algorithms could amplify their capabilities.
• Hybrid Architectures and Dark HPC: The growing reliance on hybrid models—blending on-premises, cloud, and edge systems—emphasizes the need for infrastructure that accommodates both classical and quantum resources. Quantum computing is increasingly seen as a vital part of these hybrid architectures, preparing organizations to address the emerging challenges of the advanced computing landscape.

With quantum computing approaching a pivotal point of impact, its role as a complementary technology to AI, HPC, and edge solutions becomes increasingly clear. Organizations navigating these changes should view quantum as an integral component of a broader strategy, positioning themselves to capitalize on its potential as it begins to deliver on its promise within the next few years.

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A Growing Market with Steady Progress

The global quantum computing (QC) market is projected to grow from approximately $1 billion in 2024 to $1.5 billion by 2026, reflecting a robust annual growth rate of 22.1%. This growth is being driven by multiple factors on both the supply and demand sides:

• Supply-Side Drivers: Established QC providers are experiencing continued revenue growth, while new entrants diversify the market. The emergence of domestic suppliers in nascent markets and a more specialized QC stack highlight a maturing ecosystem.
• Demand-Side Momentum: Government programs and procurements play a crucial role in enhancing market credibility, while businesses are exploring quantum computing to accelerate critical compute jobs and uncover novel use cases.

However, quantum computing’s current limitations are important to acknowledge. Despite exciting demonstrations of quantum advantage in specific scenarios, these achievements are typically restricted to controlled or contrived problems. For example, quantum systems have not yet solved problems that are intractable for classical computers in practical, everyday contexts.

Hybrid Computing: The Integration of Quantum and HPC

One of the most promising trends in advanced computing is the integration of quantum computing with traditional high-performance computing (HPC). Hybrid architectures enable organizations to leverage the strengths of both platforms, creating new opportunities for innovation.

• Cloud Adoption: By 2028, cloud computing is expected to account for 31.2% of the total HPC market, up from 20.1% in 2023. This trend is mirrored in the quantum space, where cloud-based quantum platforms provide flexible, scalable access to hardware for experimentation and development.
• Hybrid Algorithms: Organizations are developing hybrid algorithms that combine quantum and classical resources. This approach allows researchers to experiment with workloads such as optimization, simulation, and machine learning.
• Collaborative Infrastructure: Embedding quantum systems into HPC centers creates opportunities for hybrid applications, enabling researchers to combine classical and quantum techniques to tackle complex problems.

By focusing on hybrid computing, organizations can experiment with quantum’s capabilities while continuing to rely on classical systems for scalability and reliability.

Investing in the Quantum Workforce

Preparing for a quantum-enabled future requires a skilled workforce. Governments, academic institutions, and private companies are investing in talent development to ensure the ecosystem is ready to harness quantum technologies when they mature.

• Educational Programs: Institutions are developing training programs to build competencies in quantum programming, error correction, and algorithm development.
• Strategic Investments: Companies are proactively building in-house quantum teams, despite the technology’s current limitations, to gain expertise and stay ahead of the curve.

This focus on workforce development reflects a recognition that quantum computing’s success will depend as much on skilled professionals as on technological advancements.

Government Investments: Strategic Catalysts for Growth

Governments around the world are playing a pivotal role in driving quantum computing forward. Global spending on quantum technologies has surpassed $55 billion, with investments targeting research, development, and national security priorities.

• Key Initiatives: Programs in North America, Europe, and Asia are funding quantum R&D, supporting startups, and fostering collaborations between academia and industry.
• Strategic Goals: Beyond technological development, governments see quantum computing as a critical tool for maintaining economic competitiveness and addressing cybersecurity challenges, including post-quantum cryptography.

Such investments not only advance quantum computing but also provide immediate value by creating robust research ecosystems and encouraging early adoption across sectors.

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Applications and Use Cases: Where Quantum Shines

As the quantum computing market matures, specific use cases and algorithm types are emerging as key revenue drivers. According to Hyperion Research, by 2026, the market’s revenue distribution will look as follows:

• Modeling and Simulation (22%): Used in materials science, pharmaceuticals, and advanced manufacturing, quantum systems excel in simulating complex molecular interactions.
• Optimization (19%): Industries like logistics, finance, and energy are exploring quantum algorithms to solve intricate optimization problems.
• AI and Machine Learning (18%): Quantum-enhanced AI applications hold promise for improving model training and performance, particularly for large-scale optimization tasks.
• Cybersecurity (13%): As quantum technologies evolve, their role in encryption and post-quantum cryptography is becoming increasingly critical.
• Monte Carlo Methods (8%) and Other Algorithms (17%): These reflect additional experimentation with hybrid and niche applications.

While these applications illustrate quantum’s potential, the technology’s practical utility remains in an exploratory phase. Many organizations are conducting small-scale experiments, treating quantum computing as a long-term strategic investment.

Challenges: Bridging the Gap Between Promise and Reality

Quantum computing faces significant challenges that must be addressed to unlock its full potential:

• Hardware Scalability: Achieving fault tolerance and scalability remains a critical hurdle for quantum systems.
• Integration Complexity: Developing seamless interoperability between quantum and classical systems is essential for hybrid architectures to succeed.
• Talent Shortage: The demand for quantum expertise far exceeds the available talent pool, highlighting the importance of continued investment in education and training.

These challenges reinforce the importance of a balanced approach, where organizations prepare for quantum’s future potential while managing expectations about its current capabilities.

The Rise of Cloud-Based Quantum Computing

Cloud services are reshaping how organizations access and utilize quantum computing. By 2028, cloud-based solutions are expected to account for 31.2% of the total HPC market, up from 20.1% in 2023. Quantum computing is benefiting from this shift, with cloud platforms offering:

• Flexible access to cutting-edge quantum hardware (Editor's note: such as QuEra's Aquila).
• Collaboration-friendly environments that reduce data silos.
• ost-effective, scalable solutions for diverse workloads.

Hybrid models that combine on-premises HPC capabilities with cloud-based quantum resources are emerging as a practical pathway for many organizations.

The Path Forward: Trends Shaping Quantum Computing

Looking ahead, several trends will shape the quantum computing market:

• Hybrid Models: The convergence of quantum, AI, and HPC will drive innovation in computational science, enabling more efficient and powerful solutions.
• Standardization and Interoperability: As the industry matures, standardizing hardware and software interfaces will be critical for widespread adoption.
• Cloud-Driven Access: With the cloud projected to account for nearly one-third of the HPC market by 2028, it will continue to play a key role in democratizing access to quantum technologies.
• Focus on Practical Applications: As businesses experiment with quantum technologies, the emphasis will shift toward solving real-world problems with measurable benefits.

Conclusion

Quantum computing stands at the intersection of potential and preparation. While its full capabilities have yet to be realized, the industry is laying a strong foundation through market growth, hybrid integration, workforce development, and strategic investment.

The numbers tell a story of cautious optimism: a $1.5 billion market by 2026, growing cloud adoption, and a significant share of revenues driven by optimization, AI, and simulation. As organizations navigate this landscape, balancing near-term experimentation with long-term vision will be key to unlocking quantum’s transformative potential.

In the coming years, quantum computing will continue to evolve as part of a broader advanced computing ecosystem. For those willing to invest in its future, the opportunities could be as profound as the challenges are complex.