A Rising Quantum Computing Leader as HSBC Trial Shows 34% Improvement in Bond Trading

IBM has emerged as a surprising leader in quantum computing, drawing attention away from smaller pure-play companies in the field. Recent developments suggest that the company’s long-term investments are beginning to translate into practical results, giving it a unique position in a technology race that many consider years from reaching commercial maturity.

A major catalyst came last week when HSBC announced that a trial using IBM’s quantum systems helped improve the prediction of bond trading patterns by about 34% compared with traditional methods. The test marked one of the clearest examples of quantum tools being applied to real financial problems, moving the technology out of the laboratory setting.

The news sent IBM into the spotlight, prompting renewed debate over whether a diversified technology company may be better positioned to capitalize on quantum progress than smaller firms dedicated solely to the space. 

For investors, the development is a reminder that the battle for leadership in quantum computing is no longer confined to niche players but includes established enterprises with global reach.

The HSBC trial

A recent trial between HSBC and IBM delivered strong evidence that quantum computing may provide practical benefits for financial markets. The experiment focused on algorithmic bond trading in the European corporate bond market. HSBC reported a 34% improvement in the accuracy of predicting whether a bond trade would be filled at a quoted price, compared to methods using only classical computing. 

The trial combined classical computing with IBM’s Heron quantum processor. Real, production-scale data was used, including over one million quote requests for more than 5,000 bonds over a span from September 2023 to October 2024. HSBC and IBM applied hybrid models to account for real-time market conditions and risk estimates.

HSBC described the experiment as “world’s first-known quantum-enabled algorithmic trading” with practical outcomes. The improvements came from enhancing “request for quote” workflows in over-the-counter markets where counterparties negotiate without a central exchange. 

HSBC said the project showed that quantum computation could help uncover hidden pricing signals in noisy market data better than classical systems alone. 

Despite the positive results, the trial was not a live trading deployment. It used historical data rather than executing trades in real time. That means while predictive models improved, whether those gains will transfer into profits in live markets remains to be demonstrated. 

IBM’s quantum roadmap and infrastructure bets

IBM has published a detailed schedule showing its plans to build more powerful and reliable quantum computers in the coming years. The roadmap emphasizes error correction, logical qubits, and modular hardware systems.

One key component is the Starling system, expected by 2029. Starling will run 200 logical qubits and support 100 million quantum gate operations. This requires the system to correct errors reliably. It will be built at IBM’s Poughkeepsie, New York facility.

IBM’s quantum roadmap and infrastructure bets

IBM has outlined a multi-year plan to build more powerful and reliable quantum computers, focusing on error correction, logical qubits, and modular hardware systems.

A central goal is the Starling system, expected by 2029, which will feature 200 logical qubits and support 100 million quantum gate operations, requiring robust error correction.

The Heron processor is IBM’s latest chip, offering lower error rates and more two-qubit gates than its predecessor Eagle. It is integrated within the Quantum System Two architecture, which allows multiple processors to be combined while connecting classical computing elements.

IBM is also testing interim systems like Flamingo to validate components of Starling. These infrastructure bets aim to bridge the gap between today’s noisy quantum devices and future fault-tolerant machines, enabling both scaling and improved reliability.

Why IBM may outperform pure-play quantum stocks

Smaller companies like IonQ, Rigetti, and D-Wave focus solely on quantum computing, but their progress has been uneven and they remain unprofitable. Rigetti, for example, reported widening losses in 2024 and warned that scaling delays could affect growth.

IBM benefits from a diversified business model, with revenues from cloud services, AI, and IT consulting, allowing it to fund long-term quantum research without immediate profit pressure. Analysts note its forward price-to-earnings ratio is around 17, lower than many smaller quantum firms.

IBM also has scale and infrastructure advantages. Its Quantum System Two architecture and partnerships with institutions like HSBC give clients real access to its technology, while many pure plays remain in the demonstration stage. This combination of stability, valuation, and practical deployments positions IBM as a less risky and potentially more sustainable player in the quantum space.

Risks, and what to watch next

Despite IBM’s progress, important risks remain. Quantum computers are still far from replacing classical systems for most tasks. Many experts warn that today’s demonstrations, while promising, may not translate into immediate commercial advantage. JPMorgan analysts, for example, have cautioned that the timeline for achieving fault-tolerant machines could stretch well beyond current targets.

Competition is also intensifying. Google, Microsoft, and Amazon continue to advance their own quantum efforts, each leveraging cloud infrastructure and deep research budgets. Smaller firms like IonQ and D-Wave, though financially less secure, are experimenting with alternative architectures that could produce breakthroughs. If rival systems reach scalability faster, IBM’s roadmap could face pressure.

Looking ahead, investors and industry watchers will focus on key milestones. These include IBM’s ability to demonstrate reliable error correction, the rollout of interim systems such as Flamingo, and evidence that clients beyond financial services can derive measurable benefits from hybrid quantum models. 

The long-term outlook hinges not only on hitting these technical targets but also on whether IBM can maintain momentum in turning laboratory advances into commercially relevant tools.