Stronger commercial momentum and an on-track technology roadmap, but valuation constrains a rating upgrade

Overview

The report believes Quantinuum performed well in its first quarter after listing. Recent orders, revenue guidance, and improved 2027 growth visibility, together with the Oracle cloud partnership, further validate the company's technology and commercialization potential; meanwhile, the Sol and Apollo system generations remain on schedule. Despite positive fundamental signals, Morgan Stanley believes the company's long-term value remains highly dependent on the engineering realization of fault-tolerant quantum computing, commercial adoption, and the competitive landscape, and therefore maintains an Equal-weight rating.

Core views

In the near term, the company's previous revenue outlook may have been conservative, with new commercial activity driving upward revisions to 2026 to 2027 forecasts. In the medium term, Oracle's direct purchase of Helios and integration into cloud infrastructure are significant demonstrations, and U.S. government support could also create an R&D tailwind. In the long term, Sol in 2027 is the next key technology validation point, while Apollo in 2029 is the core commercial inflection point in the model; before these two milestones are achieved, there remains significant uncertainty around technology, market size, and competing approaches.

Analysis framework

The report evaluates commercialization progress by combining quarterly results, bookings and remaining performance obligations, management guidance, the product-generation roadmap, and third-party validation. It values the company using 2030 revenue scenarios, market share, and discounted forward sales multiples, while testing the impact of changes in technology execution and market adoption on value through bull, base, and bear scenarios.

Methodology notes

• Financial forecastMorgan Stanley ModelWare

  Company financial model and consensus comparison

  The report uses Morgan Stanley's internal model to forecast revenue, profit, and earnings per share, and compares them with company guidance and Refinitiv consensus expectations.

• Valuation methodsDiscounted forward enterprise value multiple method

  Discounting 2030 enterprise value and sales multiple

  In the base case, approximately $2.5 billion of 2030 revenue is multiplied by a 12x enterprise value-to-sales multiple and discounted back to the present at a 15.1% discount rate; the multiple references the 2028 average level of comparable artificial intelligence semiconductor companies.

• Scenario analysisBull, base, and bear scenarios

  Sensitivity analysis of technology roadmap, market size, and share

  The bull case assumes Apollo is delivered on schedule, quantum computing achieves broad commercial adoption, and the trapped-ion approach wins; the base case assumes a quantum infrastructure market of approximately $10 billion in 2030 and a company share of approximately 25%; the bear case emphasizes roadmap delays, a smaller market size, and share diversion to other technology approaches.

Asset mapping & comparison

Structured mapping from thesis to named assets (strengths, weaknesses, peers, risks).

• QNT.US

  Primary subject of the report

  Strengths

  The trapped-ion and QCCD architecture is clearly differentiated, logical fidelity is relatively high, the product roadmap has a good execution track record, and orders and third-party validation are strengthening.

  Weaknesses

  The revenue base is small, losses remain substantial, and long-term valuation is highly dependent on technology and market assumptions that have not yet been realized.

  Comparison

  The company is viewed as one of the leading participants in quantum computing, but multiple hardware approaches remain competitive, and it is still difficult to determine the long-term winner.

  Risks

  Delays to Sol or Apollo, failure of fault-tolerant systems to scale, commercial adoption weaker than expected, competing approaches capturing share, the quantum infrastructure market falling short of expectations, and excessive capital intensity.

• ORCL.US

  Strategic customer and cloud infrastructure partner

  Strengths

  Its purchase of Helios and planned deployment in U.S. cloud data centers are expected to provide Quantinuum with technology endorsement and a cloud-based commercialization channel.

  Weaknesses

  The partnership is still in an early stage, and actual customer demand, usage intensity, and subsequent purchase scale have not yet been validated.

  Comparison

  Unlike cloud service providers that typically connect to multiple quantum partners at the same time, the report says Quantinuum may currently be Oracle's only quantum partner.

  Risks

  Integration or deployment delays, insufficient customer adoption, and failure of the partnership to translate into sustained revenue.

Key data

• FY2026 revenue guidance$28 million to $32 millionThe midpoint is approximately $30 million, above Morgan Stanley's prior forecast of $27 million.
• 2027 revenue growth visibilityOver 100%Partly supported by the Oracle transaction and other new commercial activity.
• Second-quarter bookings$4.3 millionThe first quarter was $1.3 million.
• Year-to-date bookingsApproximately $81 millionIncludes Oracle and other transactions signed after quarter-end.
• FY2026 bookings expectationAt least $120 millionThis is management's latest expectation.
• Second-quarter remaining performance obligationsApproximately $74 millionExpected to increase significantly after recent orders are incorporated.
• FY2026 forecast revisionRevenue of $29.9 million; adjusted EBITDA loss of $211 millionPrior forecasts were $26.9 million and a loss of $256 million, respectively.
• FY2027 forecast revisionRevenue of $63.5 million; adjusted EBITDA loss of $373 millionPrior forecasts were $44 million and a loss of $387 million, respectively.
• Key product milestonesSol: second half of 2027; Apollo: 2029Both plans remain unchanged, and Apollo is viewed as the key commercial inflection point.
• Target price and rating$78; Equal-weightThe valuation is based on 12x approximately $2.5 billion of 2030 revenue, discounted at 15.1%.

Impact & implications

The earnings update strengthens market confidence in Quantinuum's early commercialization and third-party technology validation, and improves revenue visibility for 2026 to 2027. If Oracle's deployment of Helios progresses smoothly, it could become a demonstration case for cloud channel expansion and broader customer adoption. However, near-term revenue remains small relative to the long-term valuation, and continued large losses and capital needs mean the stock price will ultimately still be driven by technology milestones. Whether Sol can validate the scalability of the two-dimensional QCCD architecture, and whether Apollo can achieve commercially relevant fault-tolerant computing, will determine whether the company can attain the market share and valuation multiple assumed in the model.

Risks

• R&D, validation, or delivery delays for Sol in 2027 or Apollo in 2029.
• The QCCD architecture may fail to scale to commercially relevant fully fault-tolerant quantum systems.
• Other quantum computing technology approaches may remain competitive and lead to market share losses.
• The size of the quantum infrastructure market or the pace of commercial adoption may be below the model assumptions.
• Continued large losses and capital-intensive R&D create financing and shareholder dilution pressure.
• The Oracle partnership and current orders may fail to convert into revenue and remaining performance obligations as expected.
• Long-term revenue, 25% market share, and 12x sales multiple assumptions are relatively sensitive.
• Morgan Stanley participated in Quantinuum's securities issuance over the past 12 months and received compensation for investment banking services, creating potential conflicts of interest that should be monitored.

What to watch

• Whether FY2026 revenue can reach the guidance range of $28 million to $32 million.
• Whether full-year bookings can reach at least $120 million, and the pace at which approximately $81 million of orders converts into revenue.
• Deployment, integration, customer usage, and subsequent purchases of Helios in Oracle data centers.
• Validation results for the first Sol ion traps and delivery progress in the second half of 2027.
• Development of Apollo subsystem prototypes and whether the 2029 plan remains unchanged.
• Whether Helios' near five-nines logical fidelity can be sustained in larger-scale systems.
• The actual contribution of U.S. government projects to R&D funding, orders, and technology validation.
• Cash burn, adjusted EBITDA losses, and potential financing needs.