For decades, IBM has been promising quantum computing breakthroughs that felt close but always just out of reach. Claims of revolutionary computing power and transformative use cases never seemed to come to pass, and most dismissed quantum as either hype or something perpetually stuck in labs and academic papers.
But IBM’s recent partnership with HSBC might be a different sort of disruption because the partnership demonstrated, for the first time, practical, real-world quantum computing improvements, and spotlight exactly how quantum technology will genuinely disrupt global industries.
Quantum Moves from Concept to Reality
IBM’s quantum strategy is clear in achieving “quantum advantage”, the point where quantum computers decisively outperform classical machines thanks to full-scale, error-tolerant quantum systems expected by 2029.
Rather than chasing flashy, headline-grabbing demonstrations, IBM’s approach is steady and business-centric. The firm has already deployed over 20 quantum processors accessible via cloud-based services and has amassed a network of over 250 global partners actively experimenting and developing quantum solutions.
What most investors don’t yet grasp is the scale of IBM’s early quantum business that has amassed nearly $1 billion in commercial quantum computing bookings from corporate giants like Wells Fargo, Bosch, Boeing, and now HSBC.
HSBC’s Breakthrough Is A Watershed Moment
The significance of the HSBC-IBM collaboration lies in the practical uses that sit on the horizon now. In a notable use-case involving European bond trading, HSBC employed IBM’s quantum technology to optimize the bidding process banks use when pricing corporate bonds.
The critical challenge here involves predicting the likelihood of trade acceptance, a problem historically addressed by traditional machine learning and classical algorithms.
By integrating IBM’s Heron quantum processor into the modeling process, HSBC increased the predictive accuracy by 34%. In a competitive, ultra-thin-margin industry like bond trading, even incremental improvements can dramatically boost profitability. A 34% improvement is transformative, clearly validating quantum computing’s commercial viability today, not in some distant future.
IBM’s Hybrid Approach Has Immediate Impact
IBM is wisely sidestepping the pitfalls of waiting for full quantum maturity. Instead, it’s championing a hybrid model, where quantum processors complement existing CPU and GPU systems.
This “quantum-centric supercomputing” doesn’t require companies to overhaul their IT infrastructure completely, rather, quantum capabilities can be layered onto existing systems to tackle tasks classical computing finds challenging.
This hybrid strategy is brilliant in two ways, the first being immediate revenue streams because IBM monetizes quantum capabilities now instead of waiting years, evident by current revenue and a growing pipeline of bookings.
There’s also lower adoption risk where enterprises are more likely to experiment with and adopt quantum computing when it complements, rather than replaces, their existing technological investments.
HSBC’s success emphasizes that IBM’s hybrid quantum strategy is commercially viable right now.
Quantum Market Opportunity Now
Most investors recognize quantum computing’s market potential from reports like McKinsey’s projections of $97 billion by 2035 but history shows analysts frequently underestimate explosive technology markets, as seen with cloud computing vastly surpassing early predictions.
Quantum computing has extensive applications far beyond finance, like in pharmaceuticals where it’s drastically accelerating drug discovery as well as in logistics managing complex global supply chains.
Add to that the enhancing materials for renewables and battery technology and improving financial modeling, as already proven by HSBC.
Given the scale and diversity of industries quantum computing can revolutionize, market potential could dwarf current estimates.
IBM’s Edge Against Its Foes
IBM faces strong competition from Google, Rigetti, IonQ, and D-Wave, but IBM holds unique strengths, such as in scale and infrastructure where it’s leading the field with the highest number of quantum processors deployed.
It’s also got trusted Enterprise Relationships and distribution channels through decades-long relationships with Fortune 500 companies.
Add to those the hybrid model leadership, where unlike Google’s flashy yet commercially limited demonstrations, IBM’s strategy generates real revenue.
Plus, it has over 250 partners committed to IBM’s quantum platform create high barriers to switching.
Investment Implications Are Far-Reaching
IBM’s quantum advancements won’t immediately dominate the financials because core revenue streams still derive primarily from hybrid cloud services and traditional consulting. But quantum is a highly undervalued “free call option” embedded in IBM’s stock.
Investors treat IBM as a stable, albeit unexciting, tech company, overlooking the unfolding quantum revolution.
The recent HSBC breakthrough is the first tangible validation of quantum’s potential to impact profits significantly. As more enterprises realize practical quantum benefits, IBM may well rapidly unlock substantial growth and shareholder value.
So What Now?
IBM’s quantum computing vision isn’t just visionary, it’s actively materializing today. The HSBC breakthrough proves quantum advantage isn’t a distant dream but a real, tangible, and increasingly profitable.
Investors taking IBM seriously now might be early to the quantum computing party, but as history repeatedly demonstrates, early investors often reap outsized rewards.
The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.