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From innovation to valuation: The role of quantum technologies in asset pricing

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  • Bonaparte, Yosef

Abstract

We introduce the Quantum Finance Index (QFI), a novel metric designed to quantify the intensity of quantum computing and algorithmic innovation at the global, U.S., and firm-specific levels. The index integrates two complementary components: a sentiment-based measure, constructed from Google search trends, and an innovation-based measure, derived from quantum-related patent activity. Both components exhibit statistically and economically significant relationships with financial market outcomes. Specifically, higher QFI values are associated with increased stock returns, with an economic significance of 21.2 %, as well as elevated return volatility, reflecting the inherent uncertainty and disruptive nature of quantum technologies. Our empirical findings support the QFI as a forward-looking indicator, offering a timely and informative tool for understanding asset pricing dynamics in an era increasingly shaped by emerging quantum advancements. We employ a comprehensive set of robustness tests to ensure the validity of the QFI, including a 50/50 weighting scheme, with results remaining robust and consistent with our baseline findings.

Suggested Citation

  • Bonaparte, Yosef, 2025. "From innovation to valuation: The role of quantum technologies in asset pricing," Finance Research Letters, Elsevier, vol. 85(PE).
    • Handle: RePEc:eee:finlet:v:85:y:2025:i:pe:s1544612325015351
    DOI: 10.1016/j.frl.2025.108281
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    References listed on IDEAS

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    1. Malcolm Baker & Jeffrey Wurgler, 2007. "Investor Sentiment in the Stock Market," Journal of Economic Perspectives, American Economic Association, vol. 21(2), pages 129-152, Spring.
    2. Gerard Hoberg & Gordon Phillips, 2016. "Text-Based Network Industries and Endogenous Product Differentiation," Journal of Political Economy, University of Chicago Press, vol. 124(5), pages 1423-1465.
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    JEL classification:

    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
    • Q31 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Nonrenewable Resources and Conservation - - - Demand and Supply; Prices

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