Room Temperature Photonics And Thin Film Lithium Niobate Will Reshape Future Quantum And AI Computing

Catalysts

About Quantum Computing

Quantum Computing Inc. develops room temperature, photonics based quantum and AI hardware and software, aiming to move from prototype systems to higher volume production for commercial, government and research customers.

What are the underlying business or industry changes driving this perspective?

• Large capital raises of over US$1.5b in 2025 give the company room to fund its 3 year road map in engineering, manufacturing and sales. This can support future product delivery, revenue growth and the ability to sustain higher operating expenses while scaling.
• The shift toward energy efficient computing as AI workloads strain existing infrastructure aligns with QCi's room temperature, low size, weight and power photonic architecture. This can support broader adoption of its systems and, over time, higher revenue and potentially stronger gross margins as volumes build.
• Progress at Fab 1 with thin film lithium niobate chips, early foundry orders and planned high speed test equipment, plus early planning for Fab 2, positions the company to serve rising demand in telecom, sensing and quantum information. This can influence manufacturing scale, gross margin structure and earnings potential.
• Growing commercial traction across NASA LiDAR, a global automotive customer, a major U.S. financial institution and multiple foundry clients suggests expanding real world use cases in optimization, security and AI. This can widen the revenue base and improve visibility on future earnings.
• Industry recognition of thin film lithium niobate for next generation high speed internet, combined with the POET collaboration and the plan for Fab 2 capacity targeting hundreds of millions of chips per year, creates an opportunity to participate in larger telecommunications and datacom markets that can support higher long term revenue and operating leverage.

Assumptions

How have these above catalysts been quantified?

• This narrative explores a more optimistic perspective on Quantum Computing compared to the consensus, based on a Fair Value that aligns with the bullish cohort of analysts.
• The bullish analysts are assuming Quantum Computing's revenue will grow by 220.3% annually over the next 3 years.
• The bullish analysts are not forecasting that Quantum Computing will become profitable in next 3 years. To represent the Analyst Price Target as a Future PE Valuation we will estimate Quantum Computing's profit margin will increase from -916.2% to the average US Tech industry of 7.4% in 3 years.
• If Quantum Computing's profit margin were to converge on the industry average, you could expect earnings to reach $10.6 million (and earnings per share of $0.04) by about July 2029, up from -$39.7 million today.
• In order for the above numbers to justify the price target of the more bullish analyst cohort, the company would need to trade at a PE ratio of 1002.6x on those 2029 earnings, up from -52.0x today. This future PE is greater than the current PE for the US Tech industry at 45.2x.
• The bullish analysts expect the number of shares outstanding to grow by 7.0% per year for the next 3 years.
• To value all of this in today's terms, we will use a discount rate of 8.51%, as per the Simply Wall St company report.

Risks

What could happen that would invalidate this narrative?

• QCi is still at an early revenue stage, with third quarter revenue of about US$384,000 and a focus on small-scale, high-value manufacturing through at least the next 3 years. If adoption of quantum optimization, sensing and security solutions stays slow, the company may not build a broad enough customer base, which would pressure revenue growth and limit operating leverage.
• The company is planning a multi-year shift from Fab 1 process qualification to Fab 2 volume production and targets capacity of hundreds of millions of thin-film lithium niobate chips per year. Any delay, yield issues or weaker than expected demand for this material in telecom, datacom and quantum information could leave QCi with underutilized capacity and higher unit costs, which would weigh on gross margins and earnings.
• QCi has raised over US$1.5b in 2025 and is ramping hiring across engineering, manufacturing, sales, marketing and administration, while SG&A is expected to grow in the near term. If new customer contracts, foundry orders and product sales do not scale in line with this larger cost base, operating expenses could outpace revenue for an extended period, which would keep net margins and earnings under pressure despite a strong cash balance.
• Management is actively evaluating acquisitions to add customers, product lines and technology, but the M&A market is described as volatile and tied to unsettled stock market conditions. If deals are priced aggressively, fail to integrate smoothly or do not bring meaningful revenue, QCi could see dilution without a matching improvement in its business profile, which would limit any uplift in long-term earnings and shareholder value.
• The broader quantum and photonics sectors still face hurdles around customer education, integration with existing systems and lowering entry costs, and QCi is spending on marketing, application teams and volume production to address these points. If enterprises and governments adopt quantum-secured internet, optimization and AI hardware more slowly than expected or choose rival platforms, QCi's long-term revenue opportunity and path to sustainable net margins could fall short of current expectations.

Valuation

How have all the factors above been brought together to estimate a fair value?

• The assumed bullish price target for Quantum Computing is $30.0, which represents up to two standard deviations above the consensus price target of $18.33. This valuation is based on what can be assumed as the expectations of Quantum Computing's future earnings growth, profit margins and other risk factors from analysts on the bullish end of the spectrum.
• However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $30.0, and the most bearish reporting a price target of just $10.0.
• In order for you to agree with the more bullish analyst cohort, you'd need to believe that by 2029, revenues will be $142.4 million, earnings will come to $10.6 million, and it would be trading on a PE ratio of 1002.6x, assuming you use a discount rate of 8.5%.
• Given the current share price of $9.15, the analyst price target of $30.0 is 69.5% higher.
• We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.