June 4 (Reuters) - Honeywell's ( HON ) Quantinuum is set to make its U.S. market debut later on Thursday, after strong investor interest helped the quantum computing company raise $1.68 billion in an upsized initial public offering.

Breakthroughs in the fast-growing technology have spurred bets that quantum machines could eventually outperform conventional computers on certain complex tasks.

Sentiment was also buoyed after the U.S. government last month announced a $2 billion initiative to take equity stakes in nine quantum computing companies, including a planned $100 million investment in Quantinuum.

"The investment case is centered on the long-term potential of quantum computing and its potential role in future computing infrastructure," said IPOX Schuster analyst Kat Liu.

"The support is meaningful because quantum computing is increasingly viewed as a strategic technology with implications for national security, AI, communications and advanced computing."

The sector has also drawn investor interest as increasingly sophisticated and resource-intensive AI systems fuel expectations that demand for quantum computers could eventually gain traction.

Shares of peer IonQ have surged about 52% this year, giving the company a market value of about $25.47 billion, according to LSEG data.

Broomfield, Colorado-based Quantinuum had sold 28 million shares at $60 each, above its marketed range of $53 to $55 per share. The company earlier this week raised the shares on sale to 26.5 million.

The debut comes as the U.S. new listings market regains impetus, although investor appetite remains concentrated in technology and other high-growth sectors.

ADOPTION STILL FACES CHALLENGES

Founded in 2021 through the merger of quantum computing operations of Honeywell ( HON ) and software specialist Cambridge Quantum, Quantinuum develops quantum hardware and software systems designed to solve complex computational problems.

"Quantinuum also benefits from Honeywell's ( HON ) backing and has expanded beyond hardware into software, cybersecurity, and quantum networking applications. Commercial adoption remains limited, but investors are primarily buying into the long-term opportunity," said Liu.

Honeywell ( HON ) will own about 48.1% of the combined voting power in the company upon completion of the offering, Quantinuum has said in a regulatory filing.

Still, Quantinuum's commercial revenue remains highly concentrated.

Japan's RIKEN research institute accounted for roughly 60% of the company's 2025 revenue, highlighting the industry's continued reliance on government and research spending.

Edward Best, a partner at Willkie Farr & Gallagher, said investors should monitor whether the company broadens its customer base and increases the number and value of commercial contracts over time.

The industry also continues to grapple with high development costs, technological complexity and an uncertain timeline for widespread commercial adoption.

J.P. Morgan and Morgan Stanley are the lead active book-running managers for the offering.

(Reporting by Prakhar Srivastava and Pritam Biswas in Bengaluru; Editing by Sriraj Kalluvila)