20 January 2025, 02:00AM UTC

Chief Investment Office GWM

Investment Research

Intelligence weekly #17: Know your quantum

computing
Information technology
Authors: Delwin Kurnia Limas, CFA, Equity Strategist, UBS AG Singapore Branch; Sundeep Gantori, CFA, CAIA, Equity Strategist, UBS AG Singapore
Branch; Kevin Dennean, CFA, CIO Equity Strategist, US Technology & Telecom, UBS Financial Services Inc. (UBS FS); Achille Monnet, CFA, CIO Equity Sector
Strategist, UBS Switzerland AG; Laeticia Friedemann, CFA, Alternative Investments Strategist, UBS AG Singapore Branch

• Quantum computing has the potential to transform

AI, along with drug and material discovery,
cybersecurity, finance, logistics, and more. But
the technology is often misunderstood, making it
challenging to distinguish tangible opportunities from
hype. In this report, we aim to address key questions
about quantum computing and more.
• The quantum computing industry is in its early
stages; we estimate its addressable market will be
just USD 1.8bn by the end of this year. But driven
by substantial funding from both the public and
private sectors, we expect it to become a USD 20bn
industry by 2030 with a potential market cap of USD
300-400bn (assuming a 15-20x revenue multiple).
We see opportunities across incumbents, smaller
Source: Getty Images
players, and private markets.
• As with other frontier technologies, investing
in quantum computing carries significant risks
and requires careful portfolio sizing. We favor
large-cap companies with leading positions in
quantum hardware development (Alphabet and
Intel), companies with QCaaS capabilities (Microsoft,
NVIDIA, Alphabet, Amazon), and other quantum
enablers with strong patent portfolios (NEC,
Accenture, Qualcomm, Fujitsu, Tencent, and Hitachi).
We also see diversification opportunities through
private markets, particularly in venture capital.

Our view the real-world applications. Timing varies, too. Most leading
When it comes to quantum computing, perspectives among quantum computing companies aim to build the first
experts couldn't be more polarized. Advocates see it as the prototype of a useful, fault-tolerant quantum computer
next space race where the winners will define the future of before the end of 2030. But NVIDIA CEO Jensen Huang
technology. Skeptics, however, remain unconvinced about recently shared a more sobering view: "Useful quantum

This report has been prepared by UBS AG Singapore Branch and UBS Financial Services Inc. (UBS FS) and UBS Switzerland
AG. Please see important disclaimers and disclosures that begin on page 30.
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computers are likely 15 to 30 years away, with 20 years

being a reasonable estimate."

Yet, despite these uncertainties, the profound potential

of this frontier technology cannot be ignored,
particularly across industries such as chemicals,
pharmaceuticals, cybersecurity, defense, advanced
manufacturing, logistics, transportation, biosciences,
aerospace, and telecommunications. Much like other
disruptive technologies, such as AI, smartphones, and PCs,
early growth in the quantum ecosystem is likely to benefit
the enablers first, particularly the integrated hardware
players and QCaaS (quantum computing as a service); the
latter (QCaaS) is crucial as it'll likely become the primary
mode of accessing quantum computing capabilities.

As with other frontier technologies, investing in quantum

computing carries significant risks and requires careful
portfolio sizing. While pure-play quantum stocks offer the
potential for substantial returns, there are currently more
than six competing qubit technologies and only one will
likely prevail in the long run—akin to the videotape "format
wars" between Betamax and VHS in 1980s. AI selection list

Instead, we favor large-cap companies with leading

positions in quantum hardware development (such as
Alphabet in superconducting qubit and Intel in silicon
spin qubit), companies with QCaaS capabilities (Microsoft,
NVIDIA, Alphabet, Amazon), and other quantum enablers
with strong patent portfolios (NEC, Accenture, Qualcomm,
Fujitsu, Tencent, and Hitachi). We also see strong
diversification opportunities through private markets,
*Potential trading restrictions. This is a copy of the Equity Preference List
particularly in venture capital due to the early stage of the
(EPL) "AI." As selections may change, we recommend visiting the UBS WM
technology's development. CIO portal (which also lists the analysts responsible for the selections and
the thematic benchmark), or contacting your client advisor for the latest
In this report, we also address several key questions about update of this EPL.
quantum computing: Will it replace GPUs / AI accelerators?
(Chapter 2); what types of applications is it best suited
for? (Chapter 3); how does quantum computing differ from
classical computing? (Chapter 4); what are the different
types of quantum computers? (Chapter 5); what are
quantum algorithms? (Chapter 6); and what are their
implications for cryptography? (Chapter 7).

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Chapter 1: The road to quantum would take today's fastest supercomputers an estimated 10
septillion years, far longer than the age of the universe.
advantage: How close are we? While impressive, this achievement is a demonstration
of quantum supremacy (the point at which a quantum
Key obstacles in quantum computing center around qubit computer can perform a computation that is infeasible
instability, short coherence times, and high error rates. for classical computers, first achieved in 2019) on a
Qubits, the building blocks of quantum computers, are mathematical problem with limited real-wold utility, rather
highly sensitive to environmental noise, leading to frequent than a leap toward general-purpose applications.
errors. Without effective error correction, approximately one
in every 1,000 qubits fails, compared to the near-perfect That said, a far more consequential announcement was
reliability of classical computer bits where only one in a Alphabet's breakthrough on quantum error correction,
billion billion (quintillion) fails. which surpassed a key error correction threshold initially
conjectured in 1995. This breakthrough suggests a scalable
These error rates and limited coherence times make scaling approach to reducing error rates, as they increased the
quantum systems extremely challenging. Instead of simply number of physical qubits, a key milestone in building
increasing the number of qubits, research focuses on reliable, fault-tolerant quantum systems.
developing more stable and error-resistant qubits to achieve
meaningful computational advancements. According to Alphabet's Quantum Computing roadmap,
it has achieved its second milestone, which is creating a
Fig. 1: Key challenges in quantum computing logical qubit prototype. But despite this significant progress,
challenges remain on the road to realizing fully functional
quantum computers.

Specifically, these include four additional milestones that

must be achieved (see Fig. 2). The ultimate goal is
to construct a fully error-corrected large-scale quantum
computer capable of solving problems that remain
impossible for classical systems. Early prototypes will
potentially be available before the end of 2030, according to
the company's target. While progress has been promising,
achieving these milestones will require sustained innovation,
significant resources, and global collaboration to overcome
the remaining scientific and engineering barriers.

Source: UBS as of 2025

Recent error correction achievement marked an

important milestone, but more work is needed
In December 2024, Alphabet announced a few milestones
with its quantum computing project. First, its 105-
qubit “Willow” quantum processor solved a complex
mathematical problem in under five minutes, a task that

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Fig. 2: Alphabet's quantum computing roadmap molecular simulations or breaking RSA encryption may
require thousands of logical qubits.

Based on published roadmaps from various key

quantum computing companies, most aim to reach
the 100 logical qubit milestone by the end of
this decade. Thereafter, we think the economic
value creation will likely accelerate, particularly across
industries such as chemicals, pharmaceuticals, cybersecurity,
defense, advanced manufacturing, logistics, transportation,
biosciences, aerospace, and telecommunications.

Source: Company data, UBS as of 2025

How far are we from a useful quantum computer?

When comparing different quantum computers, it is worth
noting that raw qubit numbers aren't enough, even
though they are often highlighted as an easy-to-understand
benchmark for progress in the industry. Higher qubit
counts suggest increased computational power, but without
effective error, their utility remains limited. Logical qubit
addresses this by encoding information across multiple
physical qubits to detect and correct errors. Depending on
the technology, dozens to thousands of physical qubits are
needed for one logical qubit. Instead, the path to useful
quantum computing depends on achieving fault-tolerant
systems, with approximately 100 logical qubits as a key
milestone.

At around 100 logical qubits, quantum computers transition

from theoretical potential to early practical utility. Classical
supercomputers can generally simulate up to 50 perfect
qubits, but beyond this, resource requirements grow
exponentially. A 100 logical qubit system would surpass this
limit, allowing accurate execution of complex algorithms.
This milestone opens the door for future capabilities in
optimization and material science, while larger tasks like

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Chapter 2: From labs to market: McKinsey, total government funding is estimated at around
USD 42bn globally, reflecting the strategic importance of
The path to a USD 95bn tech quantum technologies in shaping national security and
frontier in 2040 technological leadership. China, Europe, and the US lead
this global effort. By 2030, China aims to establish a
nationwide quantum communication network, develop
Quantum computing is still a nascent industry...
advanced quantum computers, and build practical quantum
Although the quantum computing industry is growing
simulators. While official figures remain undisclosed,
rapidly and promises significant market potential, it remains
estimates suggest that government investments in quantum
in its early stages, with a relatively small addressable
technologies total approximately USD 15bn.
market. Consensus estimates suggest that the five
largest listed pure-play quantum computing firms (IONQ,
In Europe, the Quantum Technologies flagship serves as the
Rigetti Computing, QuantumCTek, D-Wave Quantum, and
primary initiative. Along with country-specific government
Quantum Computing Inc) will combine for a revenue of
funding, the region has committed more than USD
around USD 140mn by the end of 2025. However, the
13bn to develop quantum technologies. Lastly, the US
quantum computing ecosystem extends far beyond these
demonstrates strong private and startup investment in
listed firms. We estimate that nearly 500 startups, either
quantum technologies, but public spending has been
privately held or recently acquired, are working in this
relatively more measured. Under the National Quantum
space; the top 10 (see Fig. 3) currently have a combined
Initiative Act (NQI), launched in 2018, cumulative public
market valuation of around USD 12bn. In addition, major
investments reached USD 5bn between 2019 and 2024,
tech players like Alphabet, IBM and Intel have developed
with an additional USD 1bn proposed for 2025.
in-house quantum capabilities that rival those of leading
startups and pure-play quantum companies.
Fig. 4: Funding for quantum-computing-related
Overall, we project the total addressable market companies is growing steadily
for quantum computing to reach USD 1.8bn by Start-up funding (In USD mn, LHS), number of deals (RHS)

end-2025. This is driven primarily by government research

programs and corporate R&D initiatives, both utilizing
specialized on-premise quantum hardware, emerging
QCaaS offerings, and consulting services for quantum
algorithm development.

Fig. 3: Top ten venture capital-backed quantum

computing companies
Valuation in USD mn

Source: Pitchbook, UBS as of 2025

Note: Not exhaustive

... while private funding growth is healthy

While still at a relatively small scale compared to AI
and other key disruptive technologies, private funding for
quantum computing has been relatively resilient, reaching
approximately USD 1.4bn in 2024, a substantial 123%
Source: Pitchbook, UBS as of 2025
increase from the previous year. This surge reflects sustained
investor confidence in the long-term potential of quantum
... though government programs are supportive...
technologies, despite broader market uncertainties and the
Government funding has been a key pillar of quantum
funding competition with AI-related startups.
technology development so far, with key markets locked
in a race to achieve quantum supremacy. According to

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Fig. 5: Geographical breakdown of quantum

computing startups Beyond 2030, an early demonstration of quantum
In % advantage (where quantum computers offer a combination
of cheaper cost and faster computational speed in select
practical use cases) should lead to increased investment
and broader adoption across research and development
domains. Over time, we foresee QCaaS becoming a
dominant revenue stream, enabling seamless access to
quantum capabilities through major cloud platforms such as
AWS’s Amazon Braket, NVIDIA's Quantum Cloud, Microsoft
Azure Quantum, and Google Cloud Marketplace.

During this period, we anticipate a clearer picture of which

qubit technology will prevail out of the current leaders,
potentially resulting in convergence within the industry.
Given the importance of quantum algorithms, the eventual
leader will likely excel in integrating hardware and software
seamlessly, akin to NVIDIA’s success with its CUDA platform
in GPU computing.

Source: PitchBook, UBS as of 2025 We estimate the quantum computing market could reach
USD 95bn by 2040, implying a compound annual growth
In fact, according to Pitchbook’s 2H24 VC Tech survey, rate (CAGR) of 17% between 2030 and 2040. Our
Quantum computing was identified as one of the leading estimates may ultimately prove conservative. At USD 95bn,
focus areas, with 38% of respondent firms planning quantum computing will likely amount to around a high
to make investments in this field. The largest deals in single-digit percentage of global data center semiconductor
2024 underscore this momentum, with significant funding revenues then. On a broader scale, the technology's
rounds secured by Quantinuum, a leader in trapped-ion transformative potential could potentially drive efficiency
quantum computing; Q-CTRL, specializing in quantum gains, cost savings, and the creation of entirely new product
control software; and Alice & Bob, known for their categories.
superconducting qubits that are resistant to big-flip errors.
Geographically, the US continues to dominate private Fig. 6: Expect quantum computing's addressable
investment in quantum computing, driven by a strong market to increase by tenfold over the next five
ecosystem of venture capital, leading tech players, and
years
government support. But Europe is also making notable In USD bn
progress, with steady funding activity, supportive regulatory
frameworks, and growing collaboration between academia
and industry.

2030 will likely mark an inflection point

Toward the end of this decade, we expect an early
emergence of fault-tolerant quantum systems featuring
hundreds of logical qubits, capable of delivering marginal
quantum advantage across a few early use cases. While
limited, we estimate that this milestone could unlock
a market opportunity of around USD 20bn by 2030,
representing approximately 5% of global data center
semiconductor spending. Slower-than-expected progress in
scaling up the number of logical qubits poses a downside
risk to our forecast, but we believe our estimate may
ultimately prove conservative. Our optimism is underpinned
by the resilient progress achieved so far, coupled with
significant funding and R&D from both government and Source: UBS as of January 2025
private entities, as well as the potential applications of
quantum technologies.

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Investing in quantum computing Accenture, Qualcomm, Hitachi, Fujitsu, Northrop Grumman, Honeywell,
From an investment perspective, we believe there are and Tencent given their involvement in quantum computing hardware and
software development.
several key factors to consider. First, the potential market
opportunity is considerable. Assuming 15-20x revenue
multiple, our estimated USD 20bn addressable market by Fig. 8: List of companies that are currently in
2030 suggests a potential market capitalization of USD CIO's Most Preferred selections with relevant
300-400bn. quantum-related exposure

Second, much like other disruptive technologies, such

as AI, smartphones, and PCs, early growth in the
quantum ecosystem is likely to benefit the enablers first.
These enablers span multiple layers of the quantum
computing stack. In the hardware layer, integrated quantum
computing systems and their supply chains—including
chips, foundries, lights, lasers, cryogenic cooling equipment,
control hardware, vacuum systems, and interconnects—
are poised to play a significant role. Moving up the
stack, the programming layer—which includes QCaaS
providers, software, and algorithm developers and quantum Source: Bloomberg, Factset, UBS, as of January 2025
* The list shows companies with relevant quantum-related exposure for
simulators—also stands to benefit. illustrative purposes. Note that CIO’s selections are not solely driven by
positive or negative exposure to the trends described in the report. This
Fig. 7 provides a universe list of companies with exposure list is not managed as a standalone Equity Preference List. For updated
to quantum computing companies. Fig. 8 provides a subset information about these stocks, please refer to our Equity Preference Lists
of the companies that are currently in our Most Preferred for "AI" and "Japan."

list (due to broader company-specific considerations). Please

refer to the appendix for more details. Third, as with other frontier technologies, investing in
quantum computing carries significant risks and requires
careful portfolio sizing. While pure-play quantum stocks
Fig. 7: Quantum computing reference list
offer the potential for substantial returns, there are currently
This is not a list of recommendations
more than six competing qubit technologies and only one
will likely prevail in the long run, akin to the videotape
"format wars" between Betamax and VHS in 1980s.

Instead, we favor large-cap companies with leading

positions in quantum hardware development. For instance,
we believe Alphabet is particularly well positioned due
to its technological leadership in superconducting qubit
technology. It maintains a relatively strong lead, as
evidenced by its recent breakthrough in quantum error
correction and its long-standing track record, dating back to
the launch of its Quantum Artificial Intelligence Lab in 2013.
Beyond Alphabet, Intel has also made notable progress
in advancing its silicon spin quantum technology with its
Tunnel Falls chip.

In addition, we favor companies with QCaaS capabilities

(Microsoft, NVIDIA, Alphabet, Amazon), as we believe it
will be the primary mode of accessing quantum computing
capabilities in the future due to heavy capex requirement,
the high level of technical expertise required in operating
Source: Pitchbook, UBS, as of January 2025
Important note: This is a company reference list showing relevant quantum hardware, significant floor space requirement, and
publicly traded companies with quantum computing exposure globally. overall system complexity.
To select the stocks in this list, we used the PitchBook database with
quantum computing as the keyword. We excluded names with a market Beyond these groups, there are other companies with
capitalization of less than USD 10mn. Please note that this list is only
significant years of experience developing superconducting
for reference and is not exhaustive, and it is not a recommendation
list. In addition, we added NVIDIA, Alphabet, Microsoft, Amazon, Intel, quantum computers and quantum annealers, alongside

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R&D projects in applying these technologies across diverse thought of as game-changes for AI, particularly in handling
fields, including cryptography and drug discovery. As massive datasets, this remains a long-term vision due to
illustrated in Fig. 9 and 10, which shows the most active a significant technical input/output (I/O) bottleneck. For
international patent applicants based on European Patent instance, transferring large-scale classical data, such as
Office analysis, these include companies such as NEC, terabytes of training datasets, into a quantum computer is
Accenture, Qualcomm, Fujitsu, Tencent, and Hitachi. far from straightforward. Quantum random access memory
(QRAM) is often proposed as a solution, but it remains
Fig. 9: Most active international patent largely theoretical and unproven at scale.
applicants related to physical realizations of
Instead, quantum computing will likely complement existing
quantum computing
computational infrastructure by handling specific workloads
This is not a list of recommendations
that are infeasible or highly inefficient for classical hardware.
The power of quantum computers lies not in faster
individual operations (qubits are slower than classical bits),
but in their ability to process information differently.

Quantum algorithms can solve certain problems with

significantly fewer computational steps compared to
classical approaches, particularly in molecular simulations,
complex optimization problems, and cryptographic analysis.
Meanwhile, classical computers are more efficient for
simpler tasks due to their speed advantage (e.g., CPUs)
or for parallel processing and machine learning tasks
(e.g., GPUs and AI accelerators). In essence, quantum
computing's inherent advantage lies in "big compute" (e.g.,
quantum simulations, large number factorization in
cryptography), not "big data" (which requires massive
amounts of datasets).
Source: European Patent Office as of 2023

In addition, quantum computers could play a pivotal

Fig. 10: Most active international patent role in generating high-quality synthetic training data.
applicants related to quantum computing and In fields like drug discovery or material science, where
artificial intelligence/machine learning high-quality datasets are scarce, quantum simulations can
This is not a list of recommendations model complex molecular interactions to produce synthetic
datasets for training. Similarly, for autonomous vehicle
systems, quantum computers could generate extensive
datasets simulating a wide range of driving conditions,
enhancing AI training outcomes.

Source: European Patent Office as of 2023

Will quantum computing replace GPUs?

It's worth noting that quantum computing is unlikely
to fully replace graphics processing units (GPUs) or AI
accelerator chips. While quantum computers are often

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Chapter 3: Quantum applications Fig. 11: Key use cases for quantum computing
– Transforming industries, one
qubit at a time
Hype vs. reality?
Quantum computing often exists at the intersection of
groundbreaking potential and speculative hype, making
it difficult to distinguish tangible opportunities from
exaggerated claims. To address this ambiguity, governments
and research institutions have initiated rigorous evaluation
programs to assess whether quantum computers can
achieve scalable, real-world utility.

A notable example is DARPA’s Quantum Benchmarking

program, launched in 2021. Its primary goal is to determine
whether any quantum computing approach can deliver
utility-scale performance, where computational advantages
surpass implementation costs by 2033.

In 2024, the program released preliminary findings

through ten preprint research papers across diverse fields.
Problems like protein structure prediction, material and drug
discovery, and quantum chemistry are inherently quantum
mechanical, making them natural candidates for quantum
computing solutions. In these areas, quantum systems hold
the promise of exponential efficiency gains over classical
computational models.

However, not all quantum computing applications are

tied to quantum mechanical problems. Such tasks include
optimization problems in finance, transportation and
energy, supply chain management, and nonlinear dynamic
simulations involving extreme combinatorial complexity,
which overwhelms even the most advanced classical
supercomputers. Quantum computers are suitable to tackle
such complex combinatorial problems. Source: UBS as of 2025

Specifically, below are some potential use cases: to account for quantum mechanical effects, such as electron
behavior and molecular bonding, in large-scale material
systems. Quantum computers, however, excel at handling
these types of problems by leveraging qubits to process
vast amounts of information simultaneously. This capability
allows scientists to predict how different materials will
react to corrosive environments, identify optimal material
Globally, corrosion causes around USD 2.5 trillion in damage
compositions, and accelerate the discovery of novel alloys
annually, which is around 3% of the world's total economy,
or coatings with superior resistance to oxidation, moisture,
according to a study by NACE International. Quantum
and other corrosive agents.
computers have the potential to revolutionize the design
and discovery of corrosion-resistant materials by accurately
As quantum hardware and algorithms continue to mature,
simulating complex chemical reactions at the atomic and
industries such as aerospace, energy, and infrastructure
molecular levels.
stand to benefit significantly from advanced corrosion-
resistant materials engineered with quantum computers.
Traditional supercomputers struggle with modeling these
interactions due to the sheer computational power required

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the Space Foundation. Rocket launches remain central to

the space economy, accounting for a sizable financial barrier
due to the significant costs in delivering payloads. Quantum
computers offer a potentially transformative solution to
optimize rocket fuel development by addressing molecular
Quantum computers hold significant promise for advancing design challenges that are currently insurmountable for
quantum chemistry by accurately simulating complex classical computational methods.
molecular interactions that are currently beyond the reach
of classical supercomputers. One compelling application A notable example is the development of cyclic ozone
is modeling the process for nitrogen fixation in nature— additives, which could drastically improve rocket fuel
a process where atmospheric nitrogen is converted into efficiency, enabling rockets to carry up to one-third more
ammonia (fertilizer) at room temperature. payload for launch while reducing overall costs. However,
cyclic ozone remains notoriously difficult to isolate and
In contrast, the industrial Haber-Bosch process, essential stabilize due to its intrinsic instability and the complexity of
for global fertilizer production, requires extreme heat and the required synthetic processes.
pressure, consuming roughly 1% of the world's energy
and producing a similar share of global carbon dioxide By utilizing quantum phase estimation, quantum computers
emissions. Classical computers struggle to simulate the could deliver accurate calculations of ground state energies,
intricate quantum behavior of the nitrogen-fixing molecule offering critical insights for stabilizing cyclic ozone through
due to its complexity. fullerene encapsulation. This capability could unlock
significant advancements in fuel technologies, making
Quantum simulations, however, could unlock insights into previously theoretical designs practically achievable.
this natural process, potentially enabling scientists to
design more energy-efficient and environmentally friendly
alternatives to the Haber-Bosch method.

As discussed in the previous chapter, we believe quantum

computing is unlikely to replace GPUs and AI accelerator
chips over the next decade. Technical challenges, such as the
I/O bottleneck, is one key hurdle. And proposed solutions,
Quantum computers have the potential to revolutionize
such as QRAM, are still at a nascent stage and unproven
drug discovery by accurately simulating complex molecular
at scale. Instead, in the medium term, quantum computers
interactions, a task traditional computer struggle with due
will likely play a pivotal role in generating synthetic training
to their reliance on approximations. Understanding how
data, simulating a wide range of conditions and enhancing
drugs interact with biological targets, such as proteins, often
AI training outcomes.
requires costly and time-consuming lab experiments.
In the long term, as technical barriers are overcome and
Quantum computers, however, can natively model these
quantum computers are able to process massive datasets,
interactions at the quantum level, offering faster and
it could revolutionize not only the AI training phase by
more precise insights. This technology could speed up the
enabling models to learn from significantly larger datasets,
discovery of effective drugs, optimize their design, and
but also enhancing inferencing with sophisticated real-
reduce development costs. For example, amyloid beta, a
time test-time training. These improvements could drive
protein linked to Alzheimer's disease, has a complex binding
significant leaps in AI model accuracy, efficiency, and
affinity to metals like iron and copper—a relationship that's
applicability across diverse industries.
difficult to calculate using classical methods. Quantum
algorithms offer a way to better estimate these interactions,
Furthermore, certain probability distributions are inherently
potentially uncovering new therapeutic pathways.
challenging to differentiate using classical computers,
but quantum computers can handle these distinctions
with greater ease. By leveraging quantum circuits, these
models can represent and analyze intricate patterns and
relationships within datasets far more effectively than their
classical counterparts.
The global space economy reached USD 500bn in 2023,
nearly doubling in size over the past decade, according to

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and adjust investment portfolios by analyzing large asset

correlation matrices, liquidity constraints, transaction costs,
and macroeconomic indicators.

In energy grids, quantum systems can dynamically balance

Quantum computers have the potential to revolutionize
electricity supply and demand, minimizing costs, reducing
Monte Carlo simulations, the statistical technique widely
energy loss, predicting maintenance needs and preventing
used across finance and logistics, engineering, and applied
outages. In aerospace transportation, quantum computing
sciences to forecast outcomes in complex probabilistic
can optimize flight routes, reducing fuel consumption, travel
systems. Traditional simulations rely on running millions of
time, carbon emissions, maintenance costs, and overall
iterations to achieve higher accuracy, such as 99.9%, which
operational efficiency.
demands substantial computational time and resources.

In contrast, quantum computers can achieve the same

level of precision with exponentially fewer simulations,
potentially reducing the requirement from a million to
just a thousand iterations. This enhanced efficiency is
particularly valuable in industries where computational costs
are high or rapid decision-making is critical. In finance, for
example, quantum Monte Carlo methods could drastically
improve option pricing models. While classical models
like Black-Scholes offer basic estimates, they fall short in
capturing real-world market complexities, requiring more
sophisticated simulations to achieve reliable results.

Quantum algorithms could enable financial institutions

to perform these advanced simulations more efficiently,
offering faster, more accurate pricing insights and a
significant strategic edge in highly competitive markets.

Optimization problems lie at the heart of various industries,

including logistics, finance, transportation, and energy,
requiring efficient solutions among large number of
variables and constraints. Quantum algorithms excel
at tackling problems requiring the evaluation of an
exponentially large set of possibilities to determine an
optimal solution.

Many experts anticipate that quantum computers will

outperform classical systems in delivering more accurate
approximations for optimization challenges while using
fewer resources and completing computations more
efficiently. A prominent approach in this area is the quantum
approximate optimization algorithm (QAOA), a hybrid
technique that leverages both quantum and traditional
computers.

In logistics, quantum algorithms can optimize delivery routes

across extensive networks in real time, accounting for
variables like traffic, fuel costs, weather conditions, delivery
time, windows, vehicle maintenance schedules, and cargo
capacity. Similarly, in finance, they can efficiently construct

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Chapter 4: Quantum computing correction have steadily advanced the field toward practical
quantum computing.
101
Over the past decade, the quantum computing
A brief history of (quantum) computers industry has grown rapidly, with significant investments
The evolution of modern computing has been extraordinary, by leading tech companies and startups aiming to
advancing from analog systems to digital computers and build the most advanced quantum systems. Despite
now approaching the transformative era of quantum these strides, quantum computing remains complex
computing. Analog computers, emerging in the early and often misunderstood. Understanding its core
20th century, used continuous physical phenomena like principles—superposition, entanglement, interference, and
electrical voltage for calculations. During World War II, decoherence—is crucial for appreciating both its challenges
devices like the mechanical differential analyzer solved and its transformative potential.
equations for artillery targeting. These analog machines
laid the groundwork for digital computers, which use Quantum vs. classical computing – What sets them
binary bits (0s and 1s) to process information. The apart?
invention of the transistor, combined with Moore’s-law-
driven miniaturization, revolutionized digital technology, There are four key aspects that are unique to a quantum
powering devices from smartphones and laptops to medical computer: superposition, entanglement, interference, and
equipment and supercomputers. decoherence. These features enable quantum systems
to process information in fundamentally different and
Fig. 12: Norden bombsight at Computer History potentially more powerful ways than classical computers.
Museum in California
Fig. 13: Key differences between quantum and
traditional computing

Source: Allan J. Cronin

Today, we stand at the crossroads of a new era,

where quantum mechanics is driving the development of
quantum computing—a system poised to solve problems
far beyond the reach of digital computers, with potentially
transformative applications in cryptography, AI, material
science and drug discovery. The concept of quantum
computing was first proposed in the early 1980s by physicist
Richard Feynman, who suggested that simulating quantum
systems would require computers based on quantum
Source: UBS as of 2025
mechanics. In 1985, David Deutsch introduced the idea of
a universal quantum computer capable of performing any
1. Superposition
computational task.
In classical computing, information is encoded in bits, which
represent either 0 or 1, much like a light switch that can
Progress accelerated in the 1990s with Peter Shor’s
only be on or off. Quantum computing, by contrast, uses
development of a quantum algorithm for factoring large
qubits that function more like a dimmer switch, capable of
numbers, showcasing the potential of quantum computing
taking on the range of values between fully on and fully
to outperform classical systems in specific tasks. Since
off. This is due to a property called superposition, where
then, advances in quantum hardware, algorithms, and error
qubits can represent both 0 and 1 simultaneously. When

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a qubit is measured (see "Schrödinger’s cat: A thought sound, magnetic field, vibration, and even measurement.
experiment" below), its output is either 0 or 1, determined Decoherence limits the coherence time of a qubit, which is
by a probability distribution. the duration it can maintain its quantum state superposition.

A single qubit has a probability distribution over two states. To mitigate decoherence and enable reliable quantum
Adding more qubits exponentially increases the number computation, quantum error correction QC is typically used.
of possible states to two for one qubit, four for two, QC works by encoding quantum information across multiple
eight for three, and so on. A quantum computer with physical qubits, creating a “logical qubit” that is more
n qubits can exist in a superposition of 2^n states. This resilient to errors. By performing measurements on these
exponential scalability is the fundamental difference from qubits, the system can detect and correct errors that occur
classical computers and enables quantum systems to process during computation, effectively maintaining the integrity of
multiple possibilities simultaneously, unlocking immense the quantum information even when noise is present.
computational power.
Fig. 14: Key building blocks of a quantum
2. Entanglement computer
Another critical property of quantum computing is
entanglement. In a classical computer, the bits are
independent of each other. The state of one bit is not
influenced by the state of the other bits. But in quantum
computers, the qubits can be entangled with each other,
which means they become interconnected so that the
state of one qubit immediately infers the state of another,
regardless of the distance between them.

This unique property enables complex calculations that are

impossible on classical computers by essentially performing
computations on many possibilities simultaneously; this
is best illustrated by problems like simulating complex
molecules or breaking certain encryption algorithms, where
the interconnectedness of entangled states is vital for
finding solutions efficiently.

3. Interference
Interference allows quantum computers to manipulate
probability amplitudes, amplifying correct solutions through Source: UBS as of 2025
constructive interference while suppressing incorrect
ones via destructive interference. This process enables
significant computational accuracy enhancements in
quantum algorithms. Unlike classical interference, quantum
interference occurs between probability amplitudes rather
than physical realities. Schrödinger’s cat is a famous thought experiment proposed
by physicist Erwin Schrödinger in 1935 to illustrate
By adding the wave functions of entangled qubits, the concept of quantum superposition and the role
interference adjusts the probabilities of various outcomes, of observation in quantum mechanics. The thought
guiding the quantum computer toward correct solutions. experiment imagines a cat in a sealed box with a 50%
For example, quantum error correction leverages chance of being poisoned by the decay of a radioactive
interference to detect and fix computation errors, while atom. Until the box is opened and observed, the cat exists in
Grover's algorithm uses it to efficiently search for specific a superposition of being both alive and dead, highlighting
solutions. the peculiar nature of quantum systems where particles can
exist in multiple states simultaneously.
4. Decoherence
This is a process where a quantum system loses its At its core, the thought experiment addresses the
quantum properties. It occurs when a qubit interacts with its measurement problem in quantum mechanics—when and
environment, causing it to lose its quantum properties and how a quantum system transitions from a superposition
behave classically. This interaction can be unintentionally of states to a single definite outcome. It questions our
triggered by various factors including radiation, heat, classical intuition that objects must exist in one state or

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another, contrasting it with the quantum view that multiple

outcomes coexist until observed. Schrödinger’s cat remains
a powerful illustration of quantum theory’s counterintuitive
principles and its challenges in reconciling with classical
physics.

In the context of quantum computing, Schrödinger's cat

serves as a metaphor for the superposition of qubits. Just as
the cat can be alive and dead at the same time, a qubit can
represent both 0 and 1 simultaneously. This superposition
allows quantum computers to perform calculations in many
possibilities at once, vastly increasing their computational
power.

Fig. 15: Erwin Schrödinger, a Nobel Prize winning

physicist who developed fundamental results in
quantum theory

Source: Nobel foundation

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Chapter 5: The quantum map Fig. 16: Key characteristics of superconducting

quantum computers
– Navigating the key types of
quantum computers
The evolution of quantum computing mirrors the early
transistor era, where multiple technologies vied for
dominance. In the 1960s and 1970s, the semiconductor
industry saw competition among PMOS (p-type metal oxide
semiconductor), NMOS (n-type metal oxide semiconductor),
and CMOS (complementary metal oxide semiconductor)
technologies. Initially, PMOS and NMOS were favored for
their noise-tolerance and speed, respectively. But, CMOS,
despite being considered complex, eventually became the
standard due to its low power consumption and high noise
immunity.

Within the current quantum computing landscape, several

competing approaches to building quantum computers
have emerged. Different technologies have their advantages
and disadvantages. For instance, superconducting qubits
offer speed but face scaling limits and extreme cooling
requirement. Trapped-ion systems provide precise control
but struggle with hardware complexity. Neutral atom
platforms scale well but face speed challenges. In this
section, we take a deeper dive into some of the most
common types of quantum computers.

Superconducting quantum computers

Superconducting quantum computers are currently among Source: UBS as of 2025

the most advanced and widely explored types of quantum

computers. They leverage the principles of superconductivity But this comes with trade-offs. These qubits are highly
to create and manipulate qubits. Superconductors are sensitive to environmental noise and lose their quantum
materials that, at extremely low temperatures, allow electric states (decoherence) quickly, requiring error-correction
current to flow without resistance. Using these materials, strategies. Additionally, the need for cryogenic cooling
researchers create tiny circuits known as Josephson systems makes them expensive and impractical for
junctions, which can represent qubits. widespread use outside specialized labs or data centers.
Lastly, the development of high-quality superconducting
To build and operate these quantum computers, circuits requires cutting-edge manufacturing processes,
the environment must be cooled to extremely low adding to the costs.
temperatures, typically around -273°C, using sophisticated
cryogenic systems. This ensures the superconducting Several notable companies and institutions are leading the
materials maintain their unique properties. Unlike some development of superconducting quantum computers.
other quantum computing approaches like trapped-
ion systems, which involve manipulating individual ions, IBM: A pioneer in the field, it was the first company
superconducting quantum computers are considered solid- to make quantum computing accessible to the public
state as they are built using engineered electrical circuits. by putting a quantum processor on the cloud. IBM's
It is built using established semiconductor fabrication Qiskit, one of the most widely used open-source quantum
techniques, making it easier to manufacture and potentially software development frameworks, enables users to write
scale up compared to other quantum technologies. and run quantum programs. IBM Quantum Heron, the
This has made them the front-runner for many tech company's most advanced quantum processor to date,
companies pushing the boundaries of quantum computing. utilizes Qiskit to execute certain quantum circuits with
In addition, superconducting qubits can perform quantum up to 500 two-qubit gate operations. This represents
gate operations very quickly, which is much faster than some nearly double the gate operations achieved in IBM's 2023
other types. demonstration of quantum utility, highlighting significant

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progress in computational accuracy and scalability. By 2029, computer featuring the domestically developed 504-qubit
the company plans to launch a fully error-corrected system Xiaohong chip, setting a new domestic benchmark in
with 200 qubits capable of running 100 million gates. quantum computing. It was developed collaboratively by
the China Telecom Quantum Group (CTQG), the Center for
Alphabet: The company has been at the forefront Excellence in Quantum Information and Quantum Physics
of quantum computing research. In 2019, its quantum under the Chinese Academy of Sciences and QuantumCTek
computer Sycamore achieved the milestone of quantum Co. Ltd. This system will be integrated into China Telecom’s
supremacy, solving a problem faster than classical computers Tianyan quantum computing cloud platform, launched in
could. In December 2024, Alphabet announced a few November 2023.
milestones with its quantum computing project. First, its
105-qubit “Willow” quantum processor solved a complex Trapped-ion quantum computers
mathematical problem in under five minutes, a task that Trapped-ion quantum computers use individual atoms as
would take today's fastest supercomputers an estimated 10 qubits to store and process information. In simple terms,
septillion years, far longer than the age of the universe. this technology works by trapping ions (charged atoms)
using electromagnetic fields, which hold them in place
That said, a far more consequential announcement was like marbles in a well-arranged tray. These ions are then
Alphabet's breakthrough on quantum error correction, manipulated with lasers or microwave radiation to perform
which surpassed a key error correction threshold initially quantum operations. The energy levels of the ions act as the
conjectured in 1995. This exponential error reduction is qubit states, typically represented as 0 and 1. By precisely
pivotal for scaling quantum computers to practical sizes, controlling the interactions between these ions, scientists
enabling them to handle complex real-world applications can carry out the complex calculations.
such as drug discovery, fusion energy research, and
advanced battery design. One of the key advantages of trapped-ion systems is
their long coherence times, which measures the amount
Its next step is to develop a long-lived logical of time a qubit can maintain its quantum state and
qubit, defined as one that can execute one million retain information, thereby allowing for more complex
computational operations with less than one error. computations. Additionally, trapped-ion qubits are identical
Achieving this necessitates scalable error correction, which by nature. Avoiding the fabrication imperfections that
involves enhancing qubit performance, expanding the can occur in systems reliant on engineered materials.
architecture and infrastructure, and refining error correction This uniformity offers high fidelity operations, meaning
methodologies. operations are performed with minimal errors. Lastly, unlike
the superconducting quantum computer, most trapped-ion
Rigetti Computing. Founded in 2013 and headquartered systems can operate at room temperature.
in Berkeley, California, the company focuses on full-stack
quantum computing development. One of its notable However, trapped ion quantum computers also face
recent progress was the development of the 84-qubit challenges. The systems rely heavily on lasers and precise
Ankaa-3 system, targeting a median two-qubit gate fidelity control systems, which can be complex and expensive to
exceeding 99%. This improvement in fidelity is crucial for scale. Their operations tend to be slower compared to
advancing the practical utility of quantum processors by superconducting quantum computers because of the time
reducing error rates in computations. Rigetti also announced it takes to move and manipulate ions. This slower speed
a new modular system architecture set for 2025. can limit their ability to handle real-time or high speed
computations.
D-Wave Quantum, established in 1999, specializes in
quantum annealing, a method particularly effective for Several companies are leading the development of trapped-
solving complex optimization problems. The systems are ion quantum computers.
designed to address real-world challenges across various
industries, including logistics, manufacturing, and artificial IONQ. Founded in 2015 and headquartered in Maryland,
intelligence. Unlike universal quantum computing, quantum USA, IONQ is specializing in commercial applications of
annealing is a specialized technique primarily used for trapped-ion technology. Its systems are accessible through
solving optimization problems by leveraging quantum major cloud platforms including Amazon Web Services,
fluctuations to find the best solution among many Microsoft Azure, and Google Cloud. In 2024, IonQ achieved
possibilities. a significant milestone by exceeding 99.9% two-qubit gate
fidelity on its next-generation barium on platform, marking
China Telecom Quantum Group, Chinese Academy of a critical threshold for enterprise grade quantum systems.
Sciences, and QuantumCTek. The partnership recently Looking ahead, IonQ aims to reach 99.999% logical two-
announced the Tianyan-504, a superconducting quantum

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qubit gate fidelity by the end of 2025, which is expected to Neutral atom quantum computers
enhance application performance capabilities. Neutral atom quantum computers use individual atoms as
qubits, held in place and manipulated by highly focused
Quantinuum, established in 2021 through the merger of laser beams known as “optical tweezers.” These lasers
Honeywell Quantum Solutions and Cambridge Quantum, arrange the atoms into grid-like patterns while precisely
the company operates dual headquarters in Cambridge, controlling their quantum states by exciting them into
UK, and Colorado, USA. Quantinuum’s quantum computers specific energy levels. The neutral atoms can retain quantum
have improved over the past few years, increasing their information longer than other modalities, which reduces
quantum volume—a key performance metric—from 2,048 the chances of errors. Additionally, their ability to scale
in 2021 to over a million by 2024. Looking ahead, up by trapping hundreds or even thousands of atoms in
Quantinuum aims to achieve universal, fully fault-tolerant large arrays gives them significant potential for building
quantum computing by 2030, with plans to develop systems large quantum systems. Leading players in this space include
comprising thousands of physical qubits and hundreds of Pasqal (France), Atom Computing (USA), QuEra Computing
logical qubits. (USA), and ColdQuanta (USA), all pushing the boundaries of
neutral atom technology in areas like quantum simulation
Alpine Quantum Technologies (AQT), founded in 2018 and optimization problems.
by professors Rainer Blatt, Peter Zoller, and Dr. Thomas
Munz, is headquartered in Austria. A spin-off of the Fig. 18: Key characteristics of neutral atoms
University of Innsbruck and the Austrian Academy of quantum computers
Sciences, AQT leverages over 20 years of experience in
trapped-ion technology. It was the first to design a quantum
computer housed in standard 19-inch data center racks.
With a quantum volume of 128, AQT currently operates one
of Europe's most powerful quantum systems.

Fig. 17: Key characteristics of trapped-ion

quantum computers

Source: UBS as of 2025

Photonic quantum computers

Photonic quantum computers are a type of quantum
computer that use particles of light, known as photons,
as a qubit. Unlike other quantum computers that rely on
subatomic particles or ions, photonic systems manipulate
the properties of photons—such as their polarization and
Source: UBS as of 2025 path—to perform quantum operations. These systems are

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attractive because photons are inherently fast, immune Several companies and research institutions are at the
to certain types of environmental interference, and forefront of developing photonic quantum computers.
can travel long distances without significant loss of Notable players include:
information, making them well suited for tasks like quantum
communication and distributed quantum computing. University of Science and Technology of China (USTC)
has achieved significant milestones in photonic quantum
In simple terms, photonic quantum computers rely on computing through its “Jiuzhang” series. In 2020, Jiuzhang
devices such as beam splitters, phase shifters, and achieved quantum supremacy with 76 detected photons,
detectors to manipulate and measure photons in ways that completing in 200 seconds a task that would take classical
implement quantum algorithms. Information is encoded supercomputers an estimated 600 million years. Building on
in the quantum states of photons, and computations are this success, Jiuzhang 2.0 in 2021 detected 113 photons,
carried out by directing these photons through intricate and Jiuzhang 3.0 in 2023 advanced to 255 photons,
optical circuits. showcasing rapid progress in computational power.

Fig. 19: Key characteristics of photonic quantum Xanadu, a Canadian quantum computing company
computers founded in 2016 and based in Toronto, specializes in
photonic quantum computing. In June 2022, their photonic
quantum device, Borealis utilized 216 squeezed modes and
detected a mean of 125 to 219 photons during Gaussian
boson sampling experiments. Looking ahead, Xanadu aims
to develop a fault-tolerant quantum computer capable of
scaling to one million qubits.

Quantum dot/ silicon spins quantum computers

Quantum dot quantum computers use nanoscale
semiconductor particles known as quantum dots to
represent qubits. In layman's terms, these man-made
particles can store quantum information as qubits, which are
the basis for quantum computers. Quantum dots can trap
a single electron, which can only have certain energy levels.
The spin of the electron can be controlled using a magnetic
field, and can be either “up” or “down” to correspond
to the zero or one state of the classical bit. Advantages
include their potential for high cubic density and integration
with established microchip fabrication processes. However,
they face disadvantages such as limited qubit connectivity
and complexity in controlling the spin qubits. Notable
players advancing this technology include Intel, with its
Tunnel Falls silicon spin qubit chip and Quantum Motion
Technologies (UK).

Source: UBS as of 2025

Photonic quantum computers are appealing due to their

ability to generally operate at room temperature (only
certain parts require low temperature) and their resilience to
certain noise and decoherence. However, challenges remain,
including the complexity of photon loss affecting quantum
circuit fidelity and high power consumption, particularly
with active components like lasers and modulators. These
factors must be addressed for photonic systems to become
practical for general purpose quantum computing.

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Fig. 20: Key characteristics of quantum dot/ Fig. 21: Key characteristics of topological
silicon spins quantum computers quantum computers

Source: UBS as of 2025 Source: UBS as of 2025

Topological quantum computers Besides these technologies, there are a few other
Topological quantum computers are an experimental type alternatives being explored currently. These include
of quantum computing technology that leverage topology, quantum computers with NV (nitrogen vacancy) center
a branch of mathematics studying shapes and spaces that qubits, created from defects in diamonds; Rydberg atom
remain unchanged under continuous deformations like qubits, where qubits are formed by exciting neutral atoms
stretching or bending. Unlike other quantum systems, which into highly energetic Rydberg states; and linear optics
are highly susceptible to environmental noise, topological qubits, which use light polarization to store information,
qubits store information in the braiding of anyons, exotic making them easier to manufacture but more susceptible to
quasiparticles so far observed only in two-dimensional noise compared to photonic qubits.
systems. Essentially, the way the particles move and interact
within a system is what matters, not their exact positions,
making it robust against disturbances. However, realizing
this technology is exceptionally challenging, requiring
exotic materials, extreme conditions, and precise fabrication
techniques.

The most notable player in this nascent field is Microsoft

through its Azure Quantum Initiative, which focuses on
developing Majorana zero modes as a foundation for
topological qubits. While the potential for topological
quantum computers to deliver stable, scalable, and error-
resistant systems is immense, the technology remains largely
in the research phase, with practical demonstrations still
limited.

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Chapter 6: Quantum algorithms – Fig. 22: Quantum computing tech stack

Making quantum computers tick
What is a quantum algorithm and why is it needed?
Quantum computers hold the potential to surpass classical
computers by efficiently tackling certain problems that are
intractable for classical systems. This superiority hinges on
the development of quantum algorithms that leverage
the unique properties of quantum mechanics, such as
superposition and entanglement. Currently, promising
quantum algorithms exist in fields like quantum chemistry,
finance, logistics, and cryptography.

The power of quantum computers lies not in faster

individual operations (qubits are slower than classical
bits), but in their ability to process information
differently. Quantum algorithms can solve problems with
significantly fewer computational steps compared to Source: UBS as of 2025
classical approaches. While classical algorithms are more
efficient for simpler tasks due to their speed advantage, Examples of quantum algorithms
quantum algorithms become increasingly favorable as Several quantum algorithms have been developed to
problems grow in complexity. demonstrate the potential of quantum computing:

The “crossover point.” where quantum algorithms become Shor’s algorithm

more efficient than the classical ones, is a dynamic threshold. This algorithm efficiently factors large numbers, posing
It’s influenced by advancements in classical algorithms and a serious threat to modern encryption methods that
hardware, often driven by AI, making it challenging for rely on this mathematical difficulty. For example, RSA
quantum systems to maintain a consistent edge. (Rivest-Shamir-Adleman) encryption, which secures much of
today's internet communication, works by leveraging the
Despite this ever-increasing crossover point, there are fact that while multiplying two numbers is easy, finding
complex problems that classical computation cannot the original primes from their product, a process called
inherently address. This underscores the crucial role factorization, is incredibly difficult for classical computers
of quantum algorithms in solving previously intractable when the numbers are very large. If a sufficiently powerful
challenges and unlocking new possibilities in various quantum computer runs Shor’s algorithm, it could break
scientific and technological domains. RSA encryption by quickly factoring these large numbers
(more on this below).

Grover's algorithm
This quantum algorithm significantly speeds up the process
of searching through unstructured data. Instead of checking
each possibility one by one, as a classical computer
would, Grover's algorithm uses quantum principles like
superposition and interference to zero on the solution much
faster. It achieves what is known as a quadratic speed up,
meaning the time taken is proportional to the square root
of the total number of possibilities.

For instance, imagine trying to find a specific password in

a database of one million possibilities. A regular computer
might need to test up to one million passwords individually.
But a quantum computer using Grover's algorithm could
locate the correct password in about 1,000 steps, the square
root of the million items in the database. This efficiency has
accelerated certain applications, such as improving search

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engine algorithms, analyzing massive datasets, or even

breaking cryptographic systems, much faster than classical
methods could.

Variational Quantum Eigensolver (VQE)

VQE is a promising quantum algorithm with the potential
to revolutionize various scientific and industrial fields. In the
realm of chemistry, it can help solve Schrödinger’s equation,
which governs the behavior of atoms and molecules.
While classical computers can handle simple molecular
systems, they struggle with larger, more complex ones.
VQE addresses this limitation by efficiently calculating the
eigenvalues of a large matrix, enabling the simulation of
properties of large molecules that are intractable for classical
computers.

Beyond chemistry, VQE has broad applications. For instance,

it could accelerate the design of advanced materials such
as high-efficiency solar cells. By predicting how different
atomic arrangements influence electrical conductivity
and light absorption, VQE can help identify optimal
material configurations. Similarly, VQE could contribute to
the development of innovative materials for aerospace
applications, like lightweight and heat-resistant composites
and energy storage solutions such as high-capacity and
stable batteries.

Quantum unconstrained binary optimization (QUBO).

QUBO is a type of problem that appears in many practical
areas. Solving difficult QUBO problems with classical
computers can take an extremely long time as the problem
gets bigger. To address this, researchers have created faster,
approximate methods. With advancements in quantum
computing, quantum methods using special hardware like
quantum annealers are being developed to solve these
problems more quickly.

Quantum annealers are particularly good at solving

these problems and can handle tasks that classical
computers struggle with. These include challenges like
finding the shortest travel routes (traveling salesman
problem), scheduling optimization, and even game theory
optimization. Quantum systems offer a much faster way to
tackle these complex problems.

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Chapter 7: Quantum quandary: Is With quantum capabilities, hackers may easily decode
sensitive data such as emails, financial transactions,
your password quantum proof? government communications, and military signals. Critical
infrastructure such as energy, financial, and transportation
One of the cornerstones of modern secure communication systems could be disrupted or manipulated by quantum-
is RSA encryption, which underpins essential digital services powered cyberattacks. This risk also applies to past
such as web browsers, emails, secure messaging platforms, communications as malicious actors implement the “store
banking, and other financial transactions. RSA is named now, decrypt later” (SNDL) strategy.
after the three Massachusetts Institute of Technology (MIT)
developers who first described the algorithm in 1977: Ron Specifically, SNDL is a strategy where cyber criminals collect
Rivest, Adi Shamir, and Leonard Adleman. However, the and store encrypted data with the goal of decrypting it
rise of quantum computers presents an existential threat to in the future. They use this strategy to target sensitive
RSA's security. information that will remain valuable over time, such
as government secrets, bank account information, health
The mathematics behind RSA encryption care records, personally identifiable information (PII), and
RSA encryption relies on the mathematical challenge of corporate intellectual property.
factoring large composite numbers into their prime factors.
This process is computationally expensive for classical Microsharding: A tactical mitigation factor
computers when the numbers are sufficiently large—a To mitigate the risk of SNDL attacks, organizations can
principle that ensures the security of RSA. For example, use a defensive mechanism called microsharding. It refers
RSA-2048 encryption relies on a 2,048-bit number, which to a data protection method where sensitive information
classical computers would take trillions of years to factorize. is broken down into tiny unintelligible fragments called
“shards” and scattered across multiple storage locations,
This security stems from the fact that while multiplying two making it extremely difficult for authorized users to access
large primes is straightforward, reversing the process to find and decrypt the complete data, even if they breach a
those primes from the product is exponentially harder for single storage point. It effectively safeguards data from
classical machines. This asymmetry forms the bedrock of cyberattacks like ransomware by rendering individual shards
RSA and similar cryptographic methods. useless without the full set. That said, there are some
shortcomings for this strategy and a more sustainable
Quantum computing thread to RSA solution in the long run would be to implement quantum-
Enter quantum computing. Quantum computing's unique resistant encryption.
superposition property enables it to process certain types of
problems exponentially faster than classical computers. One Quantum-resistant encryption
such quantum breakthrough is Shor’s algorithm, developed Researchers are developing quantum-resistant
in 1994. cryptographic algorithms. These systems, also known as
post-quantum cryptography, are designed to withstand
The algorithm can efficiently factorize large integers, both classical and quantum attacks.
effectively undermining RSA encryption. Breaking RSA-2048 Notable approaches include:
encryption with quantum computers would require a few
• Lattice-based cryptography, which relies on the
thousand flawless qubits. However, because the qubits we
difficulty of solving certain lattice problems that are
currently have are error-prone, it would take approximately
resistant to both classical and quantum algorithms.
20 million of today's qubits to achieve the same result.
Considering the current state of quantum hardware, where • Hash-based cryptography, which uses
devices have only achieved at most 1,000 qubits, this feat cryptographically secure hash functions to generate a
remains a future challenge. However, progress in error private and public key for signing.
correction and qubit scalability could rapidly accelerate this
• Hybrid cryptography, which uses quantum
timeline.
cryptography to generate and distribute secure keys and
then uses quantum-resistant cryptography to encrypt
Will there be a Y2Q moment?
and decrypt the data.
The term “Y2Q” (years to quantum) highlights the pressing
nature of the quantum computing threat. It marks the
moment when computers will be powerful enough to break The shift to quantum resistant cryptography
public key cryptography, a cornerstone of modern security. Switching to quantum resistant cryptography, however,
Experts project this breakthrough could occur as soon as can't wait for quantum computers to become a real threat.
2030, with some suggesting it may happen even sooner. The migration process is highly complex, involving upgrades
to protocols, software, and hardware worldwide. To address

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this, organizations like the US National Institute of Standards

and Technology (NIST) are leading efforts to create and
implement quantum resistant algorithms. In 2022, NIST
shortlisted several candidates for quantum cryptography
standards, showing solid progress.

By January 2024, US President Biden signed a national

security memorandum to protect government systems with
quantum-safe cryptography before 2030. Around the same
time, NATO unveiled its first Quantum Technology Strategy
and Denmark hosted NATO's inaugural Transatlantic
Quantum Community meeting. Overall, the development
and adoption of quantum-resistant cryptography will
be critical in ensuring a secure future for global
communications.

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Appendix

In Chapter 2, we provide a list of companies with quantum-related exposure that are currently in our Most Preferred list (Fig. 8). These
companies are added to the selection due to broader company-specific drivers beyond its quantum-related exposure. In this section, we
provide a snippet on "what drives our our opinion" on these stocks.

Company What drives our opinion

We like NVIDIA due to its strong long-term growth opportunities in AI, gaming, and data centers. And we believe
the company's competitive positioning remains well ahead of its competitors from a software, systems, and
ecosystem perspective. Hyperscale customers spending will likely remain robust in the next few years, underpinning
steady demand for its GPU and accelerators. NVIDIA is also well positioned to extend its leadership beyond the AI
NVIDIA Corporation
training market into the AI inference market while its competitors continue to lag behind. Longer-term opportunities
in edge segments like autonomous vehicle, robotics, and smart cities will likely provide more diversified
opportunities. Valuation multiple (forward P/E) is reasonable, in our view, considering its resilient growth outlook.
Key risks to our view are potentially increased competition from emerging companies and excess inventories.

In our view, Microsoft has emerged from its transition to a cloud- and subscription-based model better than many
peers, and has made significant investment in cloud capacity and AI infrastructure. This positions the company to
gain "share of wallet" within IT budgets while expanding margins. Its current valuation appears fair relative to
Microsoft Corporation growth prospects, peers, and history, but we believe MSFT shares offer an attractive combination of growth and
defensive characteristics. We believe valuation multiple (forward P/E) is reasonable considering its resilient growth
outlook. Key risks to our view include PC demand, the company's ability to drive continued margin expansion, tough
comparisons, and potential for large M&A.

We believe Google remains the pre-eminent franchise in internet search and advertising. We see longer-term growth
solidly in the double digits due to higher monetization and YouTube and share gains in cloud computing.
Additionally, we expect continued cost discipline. Finally, we believe Google has interesting options in areas such as
Alphabet Inc. Class C health care, autonomous driving, and artificial intelligence, especially generative AI. We see the valuation multiple as
interesting (P/E now versus historical levels), but it could be somewhat capped until investors feel more comfortable
about generative AI's cost and revenue implications. Key risks to our view include an economic slowdown,
regulations, competition, and operating expense control.

Amazon fosters a culture of innovation, enabling long-term investments with a willingness to try new things and
enter new markets. AMZN is the number one player in cloud, with the vast majority of its profits coming from its
AWS segment, which has an annual run rate of USD 100bn plus in revenues and has historically grown by double
digits. We view AMZN as a structural leader in e-commerce, as it continues to take share from various brick and
Amazon.com, Inc.
mortar retailers. However, we note AMZN was a clear COVID beneficiary and is now stabilizing, as consumer
spending has shifted to services. We believe Amazon's sum-of-the-Parts valuation is reasonable considering its
strong positioning in the key segments (cloud, ecommerce, etc). Risks include slowing cloud spend, wage pressure
given its large employee base, and regulatory/anti-trust actions and enforcement.

We believe Tencent will continue to thrive in China's fast-growing internet market, serving as the main distribution
platform for services from games to e-commerce and online payments. It is difficult for other players to replicate its
user scale, infrastructure, and ecosystem, in our view, which has been funded by significant income from gaming
and will further provide capital for aggressive mobile expansion. Tencent's WeChat has become a leading social
Tencent Holdings Ltd.
network and mobile-gaming distribution platform in China and, in our view, can be monetized through advertising
and e-commerce. We believe Tencent's forward P/E valuation is attractive. Key risks to our view include a faster-than-
expected slowdown in PC game revenues, aggressive spending on subsidy and marketing, and any potentially
disruptive products and/or business models from competitors.

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We view Accenture as a leader in the IT services market. Relative to large consulting and outsourcing peers,
Accenture posts better revenue growth and margins. We believe this is due to its increasing vertical focus, its
technology focus, and a proven willingness and ability to evolve its solutions and offerings as customers' needs
Accenture Plc Class A
change. However, our positive fundamental view is somewhat tempered by a relatively high valuation (EV/sales)
versus enterprise-IT-focused peers. Risks to our view include exposure to legacy maintenance revenue, management
execution, and overall demand for IT services.

Against a backdrop of "peak smartphone," we have a positive tactical view on QCOM as after two dismal years of
smartphone demand, we believe a trough is at hand. Qualcomm should benefit from both improved sales in its QCT
chip business and increased high-margin licensing revenues in its QTL segment. We are also optimistic on efforts to
QUALCOMM Incorporated gain further share in RF semiconductors. Revenues from the auto market should also benefit from solid SAAR rates
and increased digital content, though we are skeptical of its longer-term autonomous driving ambitions. We believe
Qualcomm's forward P/E valuation is in line with its past 10-year average. Key risks to our view include end market
demand, execution, competition, and the potential loss of Apple as a major customer.

We believe Hitachi's sales and profit will grow in the coming years. We see notable growth for its green energy and
mobility division, for instance its power grid business. This area benefits from structural growth related to outdated
grid infrastructure in advanced economies, new transmission lines in emerging markets, and new consumers such as
e-mobility and AI data centers. Also, each business segment is focused on digitalization and going global. While
Hitachi, Ltd.
Hitachi's forward P/E is above its historical 10-year average, we believe it's justified given its resilient profit growth
outlook in coming years. The main risks include price competition in systems integration and project risks in mega
projects in the energy and railway areas. Other risks include order cancellations and impairment losses from M&A
(e.g., GlobalLogic and power grids).

After a contraction for elevated PC purchases from COVID-related buying, we believe the PC industry is at a trough.
Longer-term growth should be supported by steady replacement rates. We expect healthy growth from Intel’s Data
Center Group (DCG), which provides processors used in traditional servers and cloud-based computing. Thirty-year
Intel Corporation Intel veteran and former VMware CEO Pat Gelsinger rejoined the company as CEO in February 2021; we are
constructive on this management change. We find its sum-of-the-parts valuation attractive relative to semiconductor
peers as well as Intel's own history. Key risks to our view include demand, share loss, and Intel's ability to improve its
manufacturing process.

Fujitsu is one of the key beneficiaries of increased IT service demand in Japan, which accounts for over 60% of its
consolidated revenue. Profitability has started to improve due to strong domestic demand, better operational
efficiency, and business portfolio restructuring in overseas markets. Fujitsu expects profit margins to continue
improving in the next fiscal year, driven by better profitability at the order stage via unit price hikes, growth in
Uvance, and more selective order acceptances. Higher efficiency through development standardization and
Fujitsu Limited automation has also contributed to the improvement. The company's shareholder return policy is becoming more
attractive thanks to better free cash flow, with plans to pay out a total of JPY 600 billion to shareholders over FY23-
25, including share buybacks of JPY 180 billion in FY24 and JPY 170 billion in FY25. While Fujitsu's forward P/E is
above its 10-year historical average, we believe it is justified given its improving shareholder return policy and
resilient outlook. Risks include a severe economic slowdown leading to lower profitability and large-scale M&A deals
at high valuations.

NEC is Japan's third-largest system integrator. The company has strong technological capability in large-scale system
development, networks, AI, biometrics, and security. More than 70% of NEC's sales are generated in Japan and
strong IT demand, especially for legacy system modernization, and digitalization trends will support earnings growth
NEC Corporation
over the next few years, in our view. While Fujitsu's forward P/E is above its 10-year historical average, we believe it
is justified given its resilient system integration outlook. Risks include weaker demand for the global IT businesses,
weak telecom carrier capex, and the emergence of unprofitable projects.

25
Information technology

12 month rating history

Release date Company name Equity Preference List Current selection Previous selection
Dec 23 2024 ARM Holdings Plc AI Most Preferred Not Listed
Jun 26 2024 ARM Holdings Plc AI Not Listed Most Preferred
Apr 10 2024 ARM Holdings Plc AI Most Preferred -
Jul 15 2024 ASML 30 for '30 Not Listed Most Preferred
Nov 28 2024 ASML EPL Equity Radar Not Listed Most Preferred
Nov 18 2024 ASML EQR-Quality growth opportunities Not Listed Most Preferred
Jun 19 2024 ASML EQR-Quality growth opportunities Most Preferred -
Nov 28 2024 ASML EQR-Tech Sector Leaders Not Listed Most Preferred
Jun 03 2024 ASML EQR-Tech Sector Leaders Most Preferred -
Apr 25 2024 ASML European Greentech Most Preferred Not Listed
Mar 12 2024 ASML European Greentech Not Listed Most Preferred
Dec 09 2024 ASML Global Quality Compounders Not Listed Most Preferred
Jul 26 2024 ASML Greentech goes global Not Listed Most Preferred
Dec 10 2024 ASML SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Oct 29 2024 ASML SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Jul 23 2024 ASML SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Jul 09 2024 ASML SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Jun 25 2024 ASML SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
May 28 2024 ASML SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Apr 18 2024 ASML SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Jan 25 2024 ASML SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Dec 10 2024 Accenture PLC SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Apr 10 2024 Adobe Systems Inc. 30 for '30 Not Listed Most Preferred
Sep 11 2024 Adobe Systems Inc. AI Most Preferred Not Listed
Mar 25 2024 Adobe Systems Inc. AI Not Listed Most Preferred
Apr 05 2024 Adobe Systems Inc. Global Quality Compounders Not Listed Most Preferred
Dec 09 2024 Adobe Systems Inc. Global top list Most Preferred -
Dec 10 2024 Adobe Systems Inc. SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Jan 03 2025 Adobe Systems Inc. USA Not Listed Most Preferred
Mar 21 2024 Adobe Systems Inc. USA Most Preferred -
Dec 13 2024 Advanced Micro Devices Asia’s new mobility Not Listed Most Preferred
Jan 26 2024 Advanced Micro Devices Asia’s new mobility Most Preferred -
Dec 10 2024 Advanced Micro Devices SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Dec 19 2024 Alibaba 30 for '30 Most Preferred -
Dec 17 2024 Alibaba Asia New Economy Leaders Not Listed Most Preferred
Sep 03 2024 Alibaba Asia ex-Japan Focus 20 Most Preferred Not Listed
Mar 07 2024 Alibaba Asia ex-Japan Focus 20 Not Listed Most Preferred
Dec 09 2024 Alibaba China’s digital economy Not Listed Most Preferred
Nov 28 2024 Alibaba EPL Equity Radar Not Listed Most Preferred
Jun 03 2024 Alibaba EPL Equity Radar Most Preferred Not Listed
Apr 18 2024 Alibaba EPL Equity Radar Not Listed Most Preferred
Nov 28 2024 Alibaba EQR-Tech Sector Leaders Not Listed Most Preferred
Jun 03 2024 Alibaba EQR-Tech Sector Leaders Most Preferred -
Dec 09 2024 Alibaba Global top list Not Listed Most Preferred
Oct 15 2024 Alibaba Global top list Most Preferred Not Listed
Dec 06 2024 Alibaba Greater China Alpha Opportunities Not Listed Most Preferred
Aug 21 2024 Alibaba Greater China Alpha Opportunities Most Preferred Not Listed
Aug 09 2024 Alphabet Inc Asia’s new mobility Not Listed Most Preferred
Jan 23 2024 Alphabet Inc Asia’s new mobility Most Preferred -
Nov 28 2024 Alphabet Inc EPL Equity Radar Not Listed Most Preferred
Nov 18 2024 Alphabet Inc EPL Equity Radar Most Preferred Not Listed
Nov 28 2024 Alphabet Inc EQR-Quality growth opportunities Not Listed Most Preferred
Nov 18 2024 Alphabet Inc EQR-Quality growth opportunities Most Preferred -
Dec 23 2024 Alphabet Inc SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Dec 10 2024 Alphabet Inc SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Sep 17 2024 Amazon.com EPL Equity Radar Not Listed Most Preferred
Jun 19 2024 Amazon.com EPL Equity Radar Most Preferred Not Listed
Sep 17 2024 Amazon.com EQR-Quality growth opportunities Not Listed Most Preferred
Jun 19 2024 Amazon.com EQR-Quality growth opportunities Most Preferred -
Sep 18 2024 Amazon.com SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Sep 06 2024 Amazon.com SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Nov 28 2024 Apple Inc. EPL Equity Radar Not Listed Most Preferred
Nov 18 2024 Apple Inc. EPL Equity Radar Most Preferred Not Listed
Oct 17 2024 Apple Inc. EPL Equity Radar Not Listed Most Preferred
Jun 19 2024 Apple Inc. EPL Equity Radar Most Preferred Not Listed
Nov 28 2024 Apple Inc. EQR-Quality growth opportunities Not Listed Most Preferred
Nov 18 2024 Apple Inc. EQR-Quality growth opportunities Most Preferred Not Listed
Oct 17 2024 Apple Inc. EQR-Quality growth opportunities Not Listed Most Preferred
Jun 19 2024 Apple Inc. EQR-Quality growth opportunities Most Preferred -

26
Information technology

12 month rating history

Release date Company name Equity Preference List Current selection Previous selection
Dec 09 2024 Apple Inc. Global Quality Compounders Not Listed Most Preferred
Mar 20 2024 Apple Inc. Global Quality Compounders Most Preferred -
Dec 10 2024 Apple Inc. SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Sep 30 2024 Applied Materials Inc. Global Quality Compounders Not Listed Most Preferred
Jul 26 2024 Applied Materials Inc. Greentech goes global Not Listed Most Preferred
Jan 24 2024 Arista Networks Inc AI Most Preferred Not Listed
Dec 10 2024 Arista Networks Inc SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred -
Sep 12 2024 Baidu, Inc. 30 for '30 Not Listed Most Preferred
Apr 16 2024 Baidu, Inc. Asia New Economy Leaders Not Listed Most Preferred
Sep 03 2024 Baidu, Inc. Asia ex-Japan Focus 20 Not Listed Most Preferred
Jan 23 2024 Baidu, Inc. Asia’s new mobility Not Listed Most Preferred
May 28 2024 Baidu, Inc. China Not Listed Most Preferred
Jun 21 2024 Baidu, Inc. China Tech Not Listed Most Preferred
Jun 21 2024 Baidu, Inc. China’s digital economy Not Listed Most Preferred
Jun 13 2024 Baidu, Inc. Global top list Not Listed Most Preferred
Mar 22 2024 Baidu, Inc. Greater China Alpha Opportunities Not Listed Most Preferred
Jun 13 2024 Baidu, Inc. Greentech goes global Not Listed Most Preferred
Dec 19 2024 Broadcom Inc. 30 for '30 Not Listed Most Preferred
May 21 2024 Cisco Systems Inc. Asia’s new mobility Not Listed Most Preferred
Jan 23 2024 Cisco Systems Inc. Asia’s new mobility Most Preferred -
Dec 10 2024 Cisco Systems Inc. SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Mar 21 2024 Cisco Systems Inc. USA Not Listed Most Preferred
Dec 05 2024 CrowdStrike Holdings Inc 30 for '30 Most Preferred -
Dec 24 2024 Datadog Inc AI Most Preferred -
Sep 19 2024 Dell Technologies Inc. AI Most Preferred Not Listed
Jan 03 2025 Dell Technologies Inc. US Information technology Most Preferred -
Sep 18 2024 Intel Corp. Infrastructure and reshoring Most Preferred -
Dec 10 2024 Intel Corp. SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Dec 09 2024 KLA Corporation Global Quality Compounders Not Listed Most Preferred
Apr 05 2024 KLA Corporation Global Quality Compounders Most Preferred -
Dec 10 2024 KLA Corporation SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred -
Dec 10 2024 LAM Research Corporation SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Dec 10 2024 Marvell Technology Group Ltd. SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Nov 28 2024 Meta Platforms EPL Equity Radar Not Listed Most Preferred
Jun 03 2024 Meta Platforms EPL Equity Radar Most Preferred Not Listed
Nov 28 2024 Meta Platforms EQR-Quality growth opportunities Not Listed Most Preferred
Oct 17 2024 Meta Platforms EQR-Quality growth opportunities Most Preferred -
Nov 28 2024 Meta Platforms EQR-Tech Sector Leaders Not Listed Most Preferred
Jun 03 2024 Meta Platforms EQR-Tech Sector Leaders Most Preferred -
Dec 09 2024 Meta Platforms Global Quality Compounders Not Listed Most Preferred
May 13 2024 Meta Platforms Global Quality Compounders Most Preferred -
Dec 02 2024 Meta Platforms SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Sep 18 2024 Meta Platforms SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Sep 06 2024 Meta Platforms SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Jul 09 2024 Meta Platforms SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Jun 25 2024 Meta Platforms SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Jun 11 2024 Meta Platforms SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Aug 28 2024 Micron Technology Inc Asia’s new mobility Not Listed Most Preferred
Aug 09 2024 Micron Technology Inc Asia’s new mobility Most Preferred Not Listed
Jul 30 2024 Micron Technology Inc Asia’s new mobility Not Listed Most Preferred
Apr 18 2024 Micron Technology Inc EPL Equity Radar Not Listed Most Preferred
Jul 22 2024 Micron Technology Inc Greentech goes global Not Listed Most Preferred
Sep 18 2024 Micron Technology Inc Infrastructure and reshoring Most Preferred -
Apr 03 2024 Micron Technology Inc SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Mar 20 2024 Micron Technology Inc SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Mar 05 2024 Micron Technology Inc SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Jan 03 2025 Micron Technology Inc USA Most Preferred -
Nov 28 2024 Microsoft Corp. EPL Equity Radar Not Listed Most Preferred
Nov 18 2024 Microsoft Corp. EPL Equity Radar Most Preferred Not Listed
Aug 05 2024 Microsoft Corp. EPL Equity Radar Not Listed Most Preferred
Jun 19 2024 Microsoft Corp. EPL Equity Radar Most Preferred Not Listed
Nov 28 2024 Microsoft Corp. EQR-Quality growth opportunities Not Listed Most Preferred
Nov 18 2024 Microsoft Corp. EQR-Quality growth opportunities Most Preferred Not Listed
Aug 05 2024 Microsoft Corp. EQR-Quality growth opportunities Not Listed Most Preferred
Jun 19 2024 Microsoft Corp. EQR-Quality growth opportunities Most Preferred -
Dec 09 2024 Microsoft Corp. Global Quality Compounders Not Listed Most Preferred
Feb 07 2024 Microsoft Corp. Global Quality Compounders Most Preferred -
Dec 02 2024 Microsoft Corp. SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Sep 06 2024 Microsoft Corp. SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred

27
Information technology

12 month rating history

Release date Company name Equity Preference List Current selection Previous selection
Jun 25 2024 Microsoft Corp. SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Dec 24 2024 MongoDB Inc AI Most Preferred -
Nov 28 2024 NVIDIA Corporation EPL Equity Radar Not Listed Most Preferred
Jun 19 2024 NVIDIA Corporation EPL Equity Radar Most Preferred Not Listed
Nov 28 2024 NVIDIA Corporation EQR-Quality growth opportunities Not Listed Most Preferred
Jun 19 2024 NVIDIA Corporation EQR-Quality growth opportunities Most Preferred -
Dec 09 2024 NVIDIA Corporation Global Quality Compounders Not Listed Most Preferred
Jul 11 2024 NVIDIA Corporation Global Quality Compounders Most Preferred -
Jan 26 2024 NVIDIA Corporation Greentech goes global Most Preferred -
Dec 10 2024 NVIDIA Corporation SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Dec 02 2024 NVIDIA Corporation SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Jan 15 2025 NXP Semiconductors NV AI Most Preferred -
Dec 09 2024 Netflix Inc Global Quality Compounders Not Listed Most Preferred
Oct 21 2024 Netflix Inc Global Quality Compounders Most Preferred -
Apr 10 2024 Oracle Corporation 30 for '30 Most Preferred -
Dec 24 2024 Oracle Corporation Greentech goes global Not Listed Most Preferred
Dec 10 2024 Oracle Corporation SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Oct 25 2024 Palo Alto Networks EPL Equity Radar Not Listed Most Preferred
Jun 03 2024 Palo Alto Networks EPL Equity Radar Most Preferred Not Listed
Oct 25 2024 Palo Alto Networks EQR-Tech Sector Leaders Not Listed Most Preferred
Jun 03 2024 Palo Alto Networks EQR-Tech Sector Leaders Most Preferred -
Sep 18 2024 Palo Alto Networks Infrastructure and reshoring Most Preferred -
Dec 10 2024 Palo Alto Networks SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Oct 29 2024 Palo Alto Networks SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Sep 18 2024 Palo Alto Networks SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Jul 23 2024 Palo Alto Networks SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Jul 09 2024 Palo Alto Networks SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
May 15 2024 Palo Alto Networks Sustainable investing, global leaders Most Preferred -
Sep 11 2024 Qualcomm Inc. AI Most Preferred Not Listed
Apr 15 2024 Qualcomm Inc. AI Not Listed Most Preferred
Oct 24 2024 Qualcomm Inc. Asia’s new mobility Not Listed Most Preferred
Jan 23 2024 Qualcomm Inc. Asia’s new mobility Most Preferred -
Nov 05 2024 Qualcomm Inc. US Information technology Not Listed Most Preferred
Sep 20 2024 Salesforce.com 30 for '30 Most Preferred Not Listed
May 30 2024 Salesforce.com 30 for '30 Not Listed Most Preferred
Nov 28 2024 Salesforce.com EPL Equity Radar Not Listed Most Preferred
Jun 03 2024 Salesforce.com EPL Equity Radar Most Preferred Not Listed
Nov 28 2024 Salesforce.com EQR-Tech Sector Leaders Not Listed Most Preferred
Jun 03 2024 Salesforce.com EQR-Tech Sector Leaders Most Preferred -
Dec 10 2024 Salesforce.com SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Sep 06 2024 Salesforce.com SPL - Equity Reverse Convertibles Tactical Opportunity List Not Listed Most Preferred
Jun 11 2024 Salesforce.com SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Dec 05 2024 Samsung Electronics 30 for '30 Not Listed Most Preferred
Jul 15 2024 Samsung Electronics 30 for '30 Most Preferred Not Listed
Sep 11 2024 Samsung Electronics Asia’s new mobility Not Listed Most Preferred
Aug 09 2024 Samsung Electronics Asia’s new mobility Most Preferred Not Listed
Dec 09 2024 Samsung Electronics Global top list Not Listed Most Preferred
May 06 2024 Samsung Electronics Global top list Most Preferred Not Listed
Oct 03 2024 Samsung Electronics Greentech goes global Not Listed Most Preferred
Jun 20 2024 Samsung Electronics Greentech goes global Most Preferred Not Listed
Sep 19 2024 Snowflake AI Most Preferred -
Nov 28 2024 Taiwan Semiconductor Manufacturing EPL Equity Radar Not Listed Most Preferred
Jun 03 2024 Taiwan Semiconductor Manufacturing EPL Equity Radar Most Preferred Not Listed
Apr 18 2024 Taiwan Semiconductor Manufacturing EPL Equity Radar Not Listed Most Preferred
Nov 28 2024 Taiwan Semiconductor Manufacturing EQR-Tech Sector Leaders Not Listed Most Preferred
Jun 03 2024 Taiwan Semiconductor Manufacturing EQR-Tech Sector Leaders Most Preferred -
Dec 09 2024 Taiwan Semiconductor Manufacturing Global Quality Compounders Not Listed Most Preferred
Dec 06 2024 Taiwan Semiconductor Manufacturing Greater China Alpha Opportunities Most Preferred -
Sep 18 2024 Taiwan Semiconductor Manufacturing Infrastructure and reshoring Most Preferred -
Dec 09 2024 Tencent Holdings China’s digital economy Not Listed Most Preferred
Dec 09 2024 Tencent Holdings Global top list Most Preferred Not Listed
Jan 26 2024 Tencent Holdings Greentech goes global Not Listed Most Preferred
Dec 10 2024 Tencent Holdings SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred -
Jul 24 2024 Texas Instruments Inc. AI Most Preferred Not Listed
Oct 24 2024 Texas Instruments Inc. Asia’s new mobility Most Preferred -
Dec 10 2024 Texas Instruments Inc. SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred Not Listed
Jan 03 2025 Texas Instruments Inc. US Information technology Most Preferred -
Feb 22 2024 Tokyo Electron AI Most Preferred -
May 17 2024 Tokyo Electron Asia New Economy Leaders Most Preferred -

28
Information technology

12 month rating history

Release date Company name Equity Preference List Current selection Previous selection
Jul 19 2024 Tokyo Electron Asia’s new mobility Not Listed Most Preferred
Feb 27 2024 Tokyo Electron Asia’s new mobility Most Preferred Not Listed
Nov 19 2024 Tokyo Electron Global Quality Compounders Not Listed Most Preferred
May 21 2024 Tokyo Electron Global Quality Compounders Most Preferred -
Jul 19 2024 Tokyo Electron Greentech goes global Not Listed Most Preferred
Feb 05 2024 Tokyo Electron Greentech goes global Most Preferred -
Mar 12 2024 Tokyo Electron Japan Most Preferred Not Listed
Feb 14 2024 Uber Technologies Inc 30 for '30 Most Preferred -
Dec 10 2024 Uber Technologies Inc SPL - Equity Reverse Convertibles Tactical Opportunity List Most Preferred -
May 15 2024 Uber Technologies Inc Sustainable investing, global leaders Most Preferred -

29
Information technology

Appendix
Required Disclosures
Company/Country Disclosures (20 January 2025)
Within the past 12 months UBS AG, its affiliates or subsidiaries may have received or provided investment services and
activities or ancillary services as per MiFID II which may have given rise to a payment or promise of a payment in relation to
these services from or to each company mentioned in the publication.

Accenture PLC 1, 3, 10, 12, Adobe Systems Inc. 1, 3, Advanced Micro Devices 3, 10, 12, 13, Alibaba 2, 3, 5, 9, 15, 16,
17, Alphabet Inc 1, 3, 14, Amazon.com 2, 3, 14, Apple Inc. 1, 2, 3, 6, 7, 8, 9, 10, 11, Applied Materials Inc. 1, 2, 3, 10,
12, 13, Arista Networks Inc 1, 3, ARM Holdings Plc 1, 3, ASML 1, 3, Baidu, Inc. 1, 3, 5, 10, 16, Broadcom Inc. 1, 3, Cisco
Systems Inc. 1, 3, 9, CrowdStrike Holdings Inc 1, 3, Datadog Inc 1, 3, 18, Dell Technologies Inc. 1, 3, 9, 11, 15, Intel Corp.
1, 3, 7, 10, KLA Corporation 3, LAM Research Corporation 1, 2, 3, Marvell Technology Group Ltd. 1, 3, Meta Platforms
3, 14, Micron Technology Inc 1, 2, 3, 10, Microsoft Corp. 1, 2, 3, 6, 7, 8, 9, 10, 11, MongoDB Inc 1, 3, Netflix Inc 1, 3,
6, NVIDIA Corporation 1, 2, 3, NXP Semiconductors NV 3, 9, 11, Oracle Corporation 1, 3, 10, Palo Alto Networks 3, 19;
Qualcomm Inc. 1, 3, 10, Salesforce.com 1, 3, Samsung Electronics 1, 2, ServiceNow 1, 2, 3, 10, 12, Snowflake 3, 13, Taiwan
Semiconductor Manufacturing 1, 3, 4, Tencent Holdings 5, 6, Texas Instruments Inc. 1, 3, 10, 12, 14, Tokyo Electron 1, Uber
Technologies Inc 3, 9, 11, 13, 15,
1. UBS holds a long or short position of 0.5% or more of the listed shares of this company.
2. The equity analyst covering this company, a member of his or her team, or one of their household members has a long
common stock position in this company.
3. UBS Securities LLC makes a market in the securities and/or ADRs of this company.
4. The equity analyst covering this company, a member of his or her team, or one of their household members has a long
rights position in this company.
5. UBS Securities Hong Kong Limited is a market maker in the Hong Kong-listed securities of this company.
6. The UBS Wealth Management strategist, a member of his or her team, or one of their household members has a long
common stock position in this company.
7. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-investment banking
securities-related services are being, or have been, provided.
8. This company/entity is, or within the past 12 months has been, a client of UBS Securities LLC, and non-securities services
are being, or have been, provided.
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or one of its affiliates.
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services from this company/entity.
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services are being, or have been, provided.
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banking securities-related services are being, or have been, provided.
13. Because this security exhibits higher-than-average volatility, the FSR has been set at 15% above the MRA for a Buy rating,
and at -15% below the MRA for a Sell rating (compared with 6/-6% under the normal rating system).
14. The fixed income analyst covering this company, a member of his or her team, or one of their household members has
a long common stock position in this company.
15. UBS has acted as manager/co-manager in the underwriting or placement of securities of this company/entity or one of
its affiliates within the past 12 months.
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the next three months.
17. UBS is acting as joint financial advisor to Paragon Shine Limited in respect of the Share Offer and Option Offer to Sun
Art Retail Group Ltd.
18. An employee of UBS is an officer, director, or advisory board member of this company.
19. UBS Financial Services Inc., its affiliates or subsidiaries owns a net long position exceeding 0.5% of the total issued share
capital of this company.
For a complete set of required disclosures relating to the companies that are the subject of this report, please mail a request
to UBS CIO Global Wealth Management Business Management, 1285 Avenue of the Americas, 8th Floor, Avenue of the
Americas, New York, NY 10019.
Contact
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disclosures with regard to financial instruments and/or issuers, please contact the mailbox [email protected] (note that
e-mail communication is unsecured) or contact your client advisor for assistance.
Frequency of updates

30
Information technology

Equity recommendation lists can be updated on a daily basis, and are refreshed whenever there is a material change.
Risk views on bond issuers and instruments are affirmed sporadically and changed ad hoc, subject to market
developments.
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AG, its subsidiaries, affiliates, and branches, you have a banking relationship with. The full name of the producing and/or
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licensed and regulated by the Saudi Arabian Capital Market Authority. Credit Suisse (UK) Limited is registered as a financial
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Equity selection system

(For US sector Equity Preferences)

US equity sector strategists provide three equity selections:
Most Preferred: We expect the stock to outperform the benchmark in the next 12 months.
Least Preferred: We expect the stock to underperform the benchmark in the next 12 months.
Bellwether: Stocks are of high importance or relevance to the sector and which the equity sector strategist expects to
perform broadly in line with the sector benchmark in the next 12 months (not rated as Most Preferred or Least Preferred).
Equity Preferences prepared by ex-US analysts don't have stocks with a Bellwether designation.
Securities in the US versions of the Equity Preference List have been removed from distribution outside the US if the security
is Bellwether.
Restricted: Issuing of research on a company by CIO GWM can be restricted due to legal, regulatory, contractual or best
business practice obligations which are normally caused by UBS Investment Bank’s involvement in an investment banking
transaction in regard to the concerned company.
The sector views represent degrees of preference relative to the S&P 500 benchmark allocation: - = moderately less preferred,
- - = less preferred, - - - = least preferred, + = moderately preferred, ++ = preferred, +++ = most preferred

Equity selection: An assessment relative to a benchmark

Equity selections in Equity Preferences lists (EPLs) are assessments made relative to a sector/industry, country/regional or
thematic benchmark. The chosen benchmark is disclosed on the front page of each EPL. It is also used to measure the
performance of the EPL owner(s). Including a stock in the EPL constitutes neither a view on its expected, standalone absolute
performance nor a price target. Rather, EPLs are meant to support the UBS House View, with the stocks included in them
selected for their superior risk/return profiles.
Our selection is based on an assessment of the company's fundamental outlook and valuation, the risks owning the stock
entails, including material sustainability risks and the diversification benefits it provides in an investment portfolio, among
many other factors. UBS GWM CIO‘s selection methodology enables wealth management clients to invest in a specific
investment theme or focus on a sector/industry or country/region.
The lead strategist is responsible for the CIO view on a stock, while the EPL owner(s) is/are responsible for the stock selection
within an EPL. Stocks can be selected for multiple EPLs. For consistency's sake, a stock can only be selected as either Most
Preferred or Least Preferred, not both simultaneously. As EPL benchmarks differ, stocks do not need to be included on every
list to which they could theoretically be added.
The country EPL is a list of Most Preferred recommended stocks that our US Equity Sector Strategy team feels are best
positioned within their respective sector coverage to outperform their respective sector benchmark over a 12-month
investment horizon. These selections should not be viewed as a portfolio as they represent a current snapshot of our views. In
the event that a recommended stock is no longer Most Preferred, the list will be updated in the next monthly publication. As
such, these recommendations are only valid as of the date of the report and performance for this list will not be calculated.
For updates to the views on these names, please consult the most recent Equity Preferences List (EPL) for the relevant sector,
which may be obtained from your Advisor.
Global asset class preferences definitions
The asset class preferences provide high-level guidance to make investment decisions. The preferences reflect the collective
judgement of the members of the House View meeting, primarily based on assessments of expected total returns on liquid,
commonly known stock indexes, House View scenarios, and analyst convictions over the next 12 months. Note that the
tactical asset allocation (TAA) positioning of our different investment strategies may differ from these views due to factors
including portfolio construction, concentration, and borrowing constraints.
1. Most attractive – We consider this asset class to be among the most attractive. Investors should seek opportunities to
add exposure.
2. Attractive – We consider this asset class to be attractive. Consider opportunities in this asset class.
3. Neutral – We do not expect outsized returns or losses. Hold longer-term exposure.
4. Unattractive – We consider this asset class to be unattractive. Consider alternative opportunities.
5. Least attractive – We consider this asset class to be among the least attractive. Seek more favorable alternative
opportunities

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Current CIO GWM Americas global rating distribution

% of companies under coverage with this rating* % for which IB services have been provided**
Rating*
Most Preferred 47.20 11.84
Bellwether 52.80 14.12
Least Preferred 0.00 0.00
*Under our industry sector relative stock view system, Most Preferred most closely corresponds with a "buy" recommendation,
Bellwether most closely corresponds with a "hold" recommendation and Least Preferred most closely corresponds with a "sell"
recommendation.
**Percentage of companies within this rating for which investment banking services were provided by UBS AG or UBS Securities
LLC or its affiliates within the past 12 months.
Source: UBS Financial Services Inc., its subsidiaries and affiliate, as of Jan 20 2025.
Statement of Risk
Equities - Stock market returns are difficult to forecast because of fluctuations in the economy, investor psychology,
geopolitical conditions and other important variables.
Current UBS CIO global rating distribution (as of last month-end)

Least Preferred 1% .. . .
Most Preferred 99% .. . .

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Disclaimer
UBS Chief Investment Office's ("CIO") investment views are prepared and published by the Global Wealth Management business
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Disclaimer
conflicts and maintains independence of its investment views and publication offering, and research and rating methodologies,
please visit www.ubs.com/research-methodology. Additional information on the relevant authors of this publication and other
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about/publications/character-risks.jsp or ask your financial advisor for a copy.
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Important Information About Sustainable Investing Strategies: Sustainable investing strategies aim to consider and
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Version D/2024. CIO82652744
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