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Congress Eyes Boosting Quantum Funds as Global Race Heats Up

(Bloomberg) -- US lawmakers from both parties are seeking to boost federal funding for quantum computing as China and other countries race to transition from research to deployment of the nascent technology across defense, intelligence and cybersecurity. Most Read from Bloomberg OpenAI's New Device Will Be Hockey Puck-Sized and Cost Over $300 Iran Wants to Bar US, Israeli Ships From Hormuz in Peace Accord Trump Administration Considers Order on Autism and Vaccines Iran Says Agreement on Hormuz Shipping Reached With Oman Walmart Tests Fulfillment Cart Changes After Child Hit in Store The House later this year is expected to debate defense funding legislation that would increase annual military spending on quantum development and application by 68% to $567 million. A similar effort is underway in the Senate to fund the nascent technology, which researchers believe could provide a range of new capabilities in everything from drug discovery to computing encryption standards. The congressional moves buttress work within the Trump administration, which in May announced plans to pour more than $2 billion into the industry through direct federal investments. In June, President Donald Trump signed an executive order aimed at advancing quantum research and development and another mandating federal agencies take steps to insulate their IT systems against quantum computer-based cyberattacks. Despite a slate of recent technological breakthroughs, investors remain skeptical of the industry's near-term commercial success, according to Philip Singerman, senior adviser at the Center for Strategic and International Studies. Shares of leading pure-play quantum companies including D-Wave Quantum Inc., Infleqtion Inc. and Rigetti Computing Inc. have fallen sharply since the start of the year as investor enthusiasm for the technology, which had been hailed by analysts as the next market-defining computing revolution after artificial intelligence, has cooled. Global X's AI and Technology ETF, which holds a basket of top AI and semiconductor stocks, has risen 20% over the same period. Another quantum company, College Park, Maryland-based IonQ Inc., last week closed its $1.8 billion acquisition of semiconductor foundry SkyWater Technology Inc. after federal regulators ended their review of the deal without taking any action to stop it. IonQ on Wednesday raised its full-year revenue forecast, and its shares have recouped most of their losses for the year. Nonetheless, funding quantum has quickly become a political priority as governments line up financing in the race for superiority on a technology that ultimately could pose security threats, breaking the systems that protect banks and government data. Story Continues A mix of startups and large firms, including Microsoft Corp. and Alphabet Inc.'s Google, are trying to apply quantum physics to make computers exponentially more powerful than today's machines. These companies are betting that the nascent field, which uses the rules of subatomic particles to manipulate and transmit information, is getting closer to delivering real-world progress in fields like drug discovery and finance. There's also the race against China, which has established a $10 billion National Laboratory for Quantum Information Sciences, while Europe and the UK combined have committed nearly three times as much public money as the US to develop the technology, according to estimates compiled by industry consultancy QBN. "In China, you see a massive push toward quantum leadership," said Darío Gil, under secretary for science at the Department of Energy. "That's the one that I'm most focused on." White House Summit One sign of quantum's growing political salience in Washington is an uptick in interactions between policymakers and industry insiders, according to Infleqtion Inc. Chief Executive Officer Matt Kinsella. Quantum executives and lobbyists are increasingly engaging with politicians to explain the technology's complexities an

Beyond NVIDIA and GPUs: The Next AI & Quantum Winners Leading 2026

The artificial intelligence boom has created enormous wealth over the past three years, with NVIDIA NVDA emerging as the undisputed leader of the AI infrastructure revolution. But as the market matures, investors are asking a different question: where will the next wave of AI winners come from? The answer may lie beyond traditional AI infrastructure. The momentum behind AI remains strong. According to the Stanford AI Index 2026, global private investment in AI continued to accelerate in 2025, with U.S. investment reaching $285.9 billion, far outpacing Europe ($20.9 billion) and China ($12.4 billion). The data underscores that capital continues to flow aggressively into AI innovation, even as the investment landscape broadens beyond GPUs.Standford University Image Source: Standford University Hyperscalers including Microsoft MSFT, Amazon, Alphabet, Oracle and Meta are collectively on track to spend more than $700 billion in capital expenditures in 2026, with AI infrastructure accounting for a significant share of those investments, signaling that the AI investment cycle is far from over (S&P Global, May 2026 article). At the same time, governments worldwide are accelerating funding for quantum computing, viewing the technology as a strategic asset for economic competitiveness and national security. The convergence of these two megatrends is creating an investment opportunity that extends well beyond today's AI leaders. AI Spending Expanding Across the Technology Stack The first phase of the AI boom rewarded semiconductor companies, particularly NVIDIA, as enterprises raced to build AI computing capacity. But the investment cycle is now broadening beyond chips. As stated earlier, major hyperscalers have collectively guided hundreds of billions of dollars in capital expenditures this year, with AI infrastructure accounting for a significant share of those investments. The spending extends beyond GPUs to custom AI accelerators, networking equipment, memory, storage, data centers and power infrastructure needed to support increasingly sophisticated AI models. Enterprises are moving from pilot projects to production-scale AI deployments, driving demand for AI servers, cloud services, cybersecurity, data management and software platforms. This expanding ecosystem has created opportunities not only for semiconductor companies but also for networking providers, cloud infrastructure vendors and enterprise software firms. Companies such as Broadcom AVGO and Marvell Technology MRVL are gaining from AI networking and custom silicon. Arista Networks is capitalizing on data-center networking upgrades and Palantir is benefiting from growing enterprise AI software adoption. Story Continues Analysts currently expect AI-related capital expenditures to remain elevated for years as businesses transition from AI experimentation to production-scale deployment.Standford University Image Source: Standford University According to the Stanford AI Index 2026, 88% of organizations globally reported using AI in 2025, up from 78% in 2024 and 55% in 2023. Governments Are Betting Big on Quantum Government support is becoming a key catalyst for the quantum computing industry. In the United States, the federal government continues to fund quantum research through the National Quantum Initiative, while agencies including the Department of Defense, DARPA and the Department of Energy are awarding contracts for quantum computing, networking and sensing technologies. Europe is advancing commercialization through its Quantum Flagship program, while the U.K. recently expanded its National Quantum Strategy with long-term funding aimed at building a globally competitive quantum industry. China also continues to invest heavily in quantum communications and computing infrastructure. Pureplays like D-Wave QBTS continue to secure government-backed research collaborations, while Rigetti has benefited from defense and public-sector contracts. As governments prioritize quantum

Is SOUN Worth Buying as Growth Collides With a Premium Valuation?

SoundHound AI, Inc. SOUN offers a high-growth enterprise AI story, but the stock still asks investors to accept a premium sales multiple, ongoing losses and substantial execution risk. The case for buying SOUN therefore depends on whether faster adoption of its conversational and agentic AI platform can translate into durable revenue growth and better cash generation. SoundHound's 37.9% Sales Growth Supports the Bull Case The Zacks Consensus Estimate calls for 2026 revenues of $233 million, up 37.9% from 2025. That growth rate supports the bull case as SoundHound expands beyond its historical automotive exposure. SoundHound AI, Inc. Price and EPS SurpriseSoundHound AI, Inc. Price and EPS Surprise SoundHound AI, Inc. price-eps-surprise | SoundHound AI, Inc. Quote Second-quarter wins and renewals spanned health care, banking, insurance, telecommunications, automotive, restaurants and retail. The wider customer mix gives SOUN more avenues for growth as enterprise AI demand broadens. OASYS Gives SOUN a Faster Path to Enterprise Scale OASYS is central to SoundHound's effort to shorten enterprise deployments and unify conversational and agentic AI across channels. Management said tasks that previously took months can now be built in minutes, while one eight-figure commitment moved from demonstration to contract in less than 90 days. Salesforce, Inc. CRM is an industry peer for SOUN. Microsoft Corporation MSFT is another, reinforcing that SoundHound is scaling OASYS in a competitive enterprise technology market. SOUN's Valuation Leaves Little Room for Execution Slips SOUN's forward 12-month price-to-sales ratio is 12, compared with 11.84 for the Zacks sub-industry, 6.51 for the Zacks Computer and Technology sector and 5.03 for the S&P 500. The premium means growth expectations remain elevated. The ratio is below SoundHound's five-year median of 14.2. The stock is therefore cheaper than its own historical norm, but it is not inexpensive relative to broader benchmarks. SoundHound's Losses and Dilution Argue for Caution SoundHound posted a second-quarter GAAP net loss of $42.8 million and used $60 million of operating cash in the first half of 2026. Those figures show that rapid revenue expansion has not yet produced sustainable profitability or positive operating cash flow. The company raised about $48.5 million through Class A share sales in the first half, while outstanding Class A shares rose to 403.3 million from 390.1 million at year-end 2025. Cash totaled $202.8 million at June 30, 2026, and the company had no debt, but further cash burn could keep dilution risk in focus. Story Continues SOUN's LivePerson Upside Comes With Integration Risk The planned LivePerson acquisition would broaden SoundHound's enterprise reach and add customers that include 25 Fortune 100 brands. Assuming the deal closes successfully, management expects at least $350 million to $400 million in 2027 revenues. The transaction also raises integration risk. Combining technologies, engineering teams, corporate cultures and enterprise platforms could strain execution, while the expected benefits depend on successful cross-selling, cost synergies and continued customer adoption. SoundHound's Scores Favor a Wait-and-Watch Stance SoundHound's growth outlook is substantial, but its valuation, losses, cash burn and acquisition demands make the risk-reward balance less clear. That supports a wait-and-see stance until execution and cash generation improve. SOUN currently carries a Zacks Rank #3 (Hold), with a VGM Score of F, Value Score of F, Growth Score of D and Momentum Score of F. The Style Scores complement the Zacks Rank, and A or B grades are more favorable than D or F. The Growth Score also considers financial-statement quality, not sales growth alone. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here. Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click t

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