IBM and Cisco have a new partnership as they target a 'quantum-computing internet'

By Emily Bary

The fruits of the partnership are admittedly years away as the companies strive for a connected fault-scale network by the 'early 2030s'

IBM's quantum efforts comprise a meaningful chunk of the stock's valuation, says an analyst.

International Business Machines is continuing its quantum-computing blitz, this time with a new Cisco Systems partnership.

The two technology stalwarts announced on Thursday that they plan to collaborate on a network of fault-tolerant quantum computers. "This network would allow problems to be run with potentially trillions of quantum gates," which Jay Gambetta, the director of IBM Research, said are crucial for complicated problems like material design and medical discoveries.

Earlier this month, IBM (IBM) announced new chips that it said would advance its previously stated goal of building "the world's first large-scale, fault-tolerant quantum computer." IBM has said that type of computer would unlock new genres of mathematical computations and leverage improved error-correction technology.

Read: IBM sees a big milestone ahead for quantum computing - and it hinges on these new chips

Cisco (CSCO) fits into the equation because achieving quantum-computing milestones would require extensive linkages between hardware, software and other elements of the technological ecosystem. "Getting quantum computing to useful scale is not just about building bigger individual machines" but "also about connecting them together," said Vijoy Pandey, a senior vice president at Cisco's Outshift quantum incubator, in Thursday's release.

The end result of this collaboration would admittedly be some years away. The companies said they're targeting the connected fault-scale network by the "early 2030s."

IBM and Cisco added that they will be trying to "scale a larger quantum network across even larger distances to form the groundwork for a future quantum-computing internet."

The efforts will position the companies to potentially capitalize on what could be a hot future trend, even as there's some debate over whether quantum companies will be able to recognize what they say is the promise of the technology. All the while, the companies have legacy businesses that generate the bulk of investors' attention.

See more: How quantum computing could become the next frontier in national security

That said, even HSBC's Abhishek Shukla, who's bearish on IBM's stock, threw some big estimates around IBM's efforts in the world of quantum computing, which could represent a $65 billion total market opportunity annually by 2040.

"IBM has built more quantum computers than all the other entities put together," he wrote, when thinking about pure-play quantum operators as well. Still, he doesn't anticipate widespread use cases for quantum even when looking over a decade out.

"We expect quantum computing to remain a niche area as these computers are faster than classical computers only in some specific tasks such as finding prime factors of a large number (helpful in breaking cryptography), atomic and molecular simulations, and specific types of optimizations," Shukla wrote.

He estimated that IBM's quantum business could be worth up to $78 billion when ascribing the sort of valuation multiples currently given to pure-play quantum stocks like D-Wave Quantum (QBTS) and Rigetti Computing (RGTI). Meanwhile, IBM's non-quantum business could be worth $181 billion, he added.

IBM currently has a market capitalization of about $270 billion.

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-Emily Bary

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11-20-25 0630ET