Why Quantinuum Is This Bank’s ‘Top Quantum Play.’ IonQ and Infleqtion Fall Short.

Morgan Stanley upgrades Quantinuum stock to Overweight from Equal-Weight, calling it the firm’s ‘top quantum play.’ (Courtesy Quantinuum)

Key Points

• Morgan Stanley upgraded Quantinuum stock to Overweight from Equal-Weight, calling the company its top quantum play.
• Morgan Stanley lowered its Quantinuum price target to $62 from $78, reflecting a broader stock slide since the company went public in June.
• Analysts cited Quantinuum’s leadership in error correction and published technical results as key drivers of the positive outlook.

A major bank is warming up to Quantinuum stock, even if public markets haven’t quite caught on.

Morgan Stanley upgraded shares of the quantum computing company to Overweight from Equal-Weight on Thursday, dubbing Quantinuum its “top quantum play.”

That bullish thesis rests on the company’s execution. Alongside consistent progress on its technical road map, the company leads in error correction, a crucial step toward building practical systems that deliver a real edge over classical machines.

Yet, puzzlingly, Quantinuum trades at the lowest multiple in its peer group, analysts noted. Morgan Stanley cut its price target on the stock to $62 from $78, reflecting a broader stock slide since the company went public in June. Shares were up 2.9% at $34 on Thursday.

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As the analysts see it, “the market is least confident in Quantinuum,” which may have something to do with its underwhelming initial public offering. The company is still shaking off the aftermath of its June IPO, which, despite being an industry first, failed to sustain momentum.

Still, wallowing in market skepticism overlooks the company’s real progress. Analysts describe Quantinuum as a leader in published technical results, offering welcome clarity at a time when peers make inflated claims about their systems’ power and performance.

While IonQ holds a slight edge in manufacturability after acquiring SkyWater Technology to bring production in-house, “the gap between our view and the market’s is far larger for Quantinuum,” analysts wrote.

The upgrade leaves Quantinuum as the only Buy-rated quantum stock in the firm’s coverage, with Morgan Stanley rating IonQ, Infleqtion , and Xanadu Quantum Technologies all at Equal-Weight.

While IonQ has “the strongest outside validation of its scaling plan,” partly due to its participation in a federal benchmarking initiative, “it sits behind Quantinuum on technology,” analysts wrote.

Crucially, IonQ has yet to prove it can replicate previous-generation error-correction results on Superion, its newest machine, which uses a radically different hardware setup. The firm lowered its price target on IonQ shares to $43 from $49, which still implies nearly 40% upside from Thursday’s price of $30.73.

Morgan Stanley maintains a similarly cautious stance on Infleqtion and Xanadu, driven by doubts over road map execution. Still, if federal partner Infleqtion can deliver its next-generation system on time in 2027, it could serve as a major catalyst.

Meanwhile, Xanadu has “a wide range of outcomes” that could drive shares as high as $9 and as low as $1, Morgan Stanley asserted. Shares were trading around $3 on Thursday. Analysts noted that while the company’s chip-based photonic approach may be easier to scale, it is the least mature of the four options, meaning Xanadu may need additional funding to get its products to market.

Out of all the pure plays in their coverage, analysts see the largest revenue opportunity for Quantinuum in 2030 against the backdrop of a $10 billion market, with further upside as the industry expands. Morgan Stanley projects a $100 billion market by 2040, while cautioning that “different hardware approaches make companies hard to compare, and revenue is still too small to separate them.”

That figure might seem overly enthusiastic, but it’s in line with other projections. Boston Consulting Group anticipates quantum computing will generate up to $850 billion of economic value by 2040. Estimates from McKinsey, which many insiders view as too bullish, pin that number somewhere between $1.3 trillion and $2.7 trillion by 2035.

Quantinuum is preparing to capture a slice of that massive market. In a recent interview with Barron’s, Quantinuum CEO Rajeeb Hazra detailed how the company builds on previous iterations of its technology to create increasingly larger and more powerful systems.

Quantinuum’s latest system, Helios, shattered records at the time of its release in late 2025. The system produced 48 fully error-corrected logical qubits at a 2:1 physical-to-logical encoding ratio, where roughly two physical qubits—the actual hardware components—create and protect a single logical qubit.

As Morgan Stanley puts it, “logical qubits are the metric that matters.” Quantinuum expects the number of error-corrected logical qubits to scale into the hundreds for its upcoming Sol and Apollo systems, which are slated to launch in 2027 and 2029, respectively.

“It’s not like a restart every time. Now it’s an architecture that we’re implementing,” Hazra told Barron’s. “We’re no longer focused on just one generation. We are focused on making the roadmap happen.”

The coming year will serve as a crucial execution test for pure-play quantum companies, with Sol shaping up to be Quantinuum’s next major catalyst. The primary risk lies in the timing of the Apollo launch, as any delay in meeting that timeline could derail momentum.

Hazra, for his part, believes the industry is shifting, with efforts to make the technology more accessible accelerating commercialization. It all creates a favorable setup, and perhaps the necessary pressure, for the company to stay on target.

“The hardest challenges now are engineering challenges,” Hazra said. “I think the haves and the have nots are going to separate on the basis of proven, third-party verifiable results versus claims or projections.”

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

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