More than half of quantum computing startups will shut down by 2030, according to a new forecast from Gartner, as too many companies chase too little commercial revenue. The analyst firm expects customers to turn away from technologies that can't deliver fault-tolerant quantum computing, which means reliable calculations even when the underlying hardware makes errors. Despite the grim outlook for startups, Gartner says businesses are starting to invest in quantum technologies as early signs of practical advantage begin to emerge.
Between 200 and 300 quantum startups are competing for a slice of a market Gartner projects will bring in $1.1 billion in worldwide revenue in 2027, up from a forecast of $869.9 million this year. That 2027 figure represents just a small fraction of what giants like Samsung and Nvidia pull in every quarter. Government agencies are expected to lead spending in 2027 at $245 million, climbing from $219 million this year, driven by national competition for technical leadership. Banking, finance, and insurance firms are forecast to overtake the public sector in 2028, spending $289 million compared to government's $280 million, and Gartner expects them to remain the biggest customer group through 2030.
The firm says businesses should view quantum computing as a long-term project aimed at gaining competitive advantage rather than waiting for the technology to fully mature. "CIOs and IT leaders should treat their quantum journey as a multi-year endeavor with the aim of gaining a competitive business advantage over their closest competitors," says Gaurav Gupta, a Gartner vice president analyst and chief of research for the firm's emerging market dynamics team. The report claims that "the early quantum advantage era has arrived" because current noisy intermediate-scale quantum processors now contain enough quantum bits to handle limited complex tasks with better error reduction. Progress is accelerating faster than initially anticipated, not just in the number of qubits but also in algorithm development, gate speeds, and reliability.
The quantum industry's central challenge is sustaining funding while commercial applications remain elusive. Large players like IBM and Google can draw on diverse revenue streams, but startups often depend on seed funding that will run dry if they can't convince investors they're making real progress. Developing useful quantum computers demands years of sustained investment, and many companies won't survive long enough to reach profitability. The report notes that even ambitious government efforts face steep odds: the US Department of Energy recently launched a program asking up to ten participants to deliver a fault-tolerant, scientifically relevant quantum computer by 2028, but the modest funding on offer makes success "almost certain to fail."
Organizations are building quantum expertise now rather than waiting for breakthroughs, betting that early positioning will pay off when the technology matures. Broad commercial usefulness remains out of reach, but the gap is narrowing as systems grow more capable and reliable. The quantum computing industry will continue making steady progress even as a wave of consolidation wipes out companies that can't turn technical advances into revenue, leaving the market to better-funded players and those that find paying customers first. Enterprises willing to invest in multi-year quantum programs may gain decisive advantages over competitors who wait too long, but only if they pick partners likely to survive the coming shakeout and can identify use cases that justify the expense before fault-tolerant systems arrive.