Quantum Computing Market Could Grow to $100 Billion-Plus Per Year by 2040, Morgan Stanley Says

01:27 PM EDT, 10/15/2026 (MT Newswires) -- The quantum computing market has the potential to grow to more than $100 billion per year by 2040, though there's uncertainty around the commercial adoption of the technology, Morgan Stanley said in a note e-mailed Thursday. Quantum computing is an emerging field of computer science and engineering that applies quantum mechanics to solve problems beyond the ability of even the most powerful classical computers, according to tech giant IBM (IBM). "If fault-tolerant quantum computers reach broad commercial adoption, the market for hardware, software and services vendors should grow from about ($10 billion) in 2030 to more than ($100 billion) a year by 2040," Morgan Stanley said in the note to clients. "No company has built one yet." Quantum computers have yet to be widely adopted for commercial use, and it remains uncertain if businesses are ready to shift to quantum computing, according to the note. Morgan Stanley picked Quantinuum (QNT) as its "top quantum play" after evaluating the sector using a proprietary framework that judges businesses based on technical progress, execution, manufacturability, and broader indicators. The firm upgraded its rating on the Quantinuum shares to overweight from equal-weight while trimming its price target to $62 from $78. "(Quantinuum) has progressed furthest among the pure plays on our error-correction framework and has the strongest execution record in the group," Morgan Stanley said. "Yet, today's share price implies only about a 43% visibility factor for Quantinuum, the lowest in the group, against our 75% assumption." Last month, Quantinuum said it finalized a $100 million funding deal with the US Department of Commerce's CHIPS Research and Development Office to boost its quantum semiconductor manufacturing capabilities. The company recently signed a memorandum of understanding with the University of Western Australia to expand access to quantum computing and develop applications combining quantum computing, artificial intelligence and high-performance computing. Morgan Stanley maintained its equal-weight rating on IonQ (IONQ) while cutting its price target to $43 from $49. "IonQ has a slight edge on manufacturability, which keeps its visibility factor close to Quantinuum's, but the gap between our view and the market's is far larger for Quantinuum," the brokerage wrote. Earlier this week, IonQ agreed to acquire cybersecurity firm Elisity in an all-stock deal worth up to $1.3 billion, as the quantum computing company looks to prepare for attacks from future quantum computers. Morgan Stanley initiated coverage of two other companies in the quantum computing sector, Infleqtion (INFQ) and Xanadu (XNDU), each with an equal-weight rating. Quantinuum shares were up nearly 11% in Thursday afternoon trade, while IonQ rose 4.2%. Infleqtion and Xanadu edged up 0.4% and 0.9%, respectively. With each company having a major system milestone due next year, Morgan Stanley called 2027 "the proof year," adding that each milestone is a test of manufacturing as well as technology. "Company roadmaps converge on initial fault-tolerant systems in (2029-2030), and today's revenue is too small to show which businesses will succeed," the firm said in the note. "The investment question is which companies are most likely to reach fault tolerance first." Price: 36.21, Change: +3.18, Percent Change: +9.61