Three small computer companies engaged in quantum computing have seen their stock values soar.
Quantum computing stocks are rising rapidly, but investors need to be psychologically prepared for long-term holdings.
After Google's parent company Alphabet (GOOGL.O) announced the launch of its new Willow quantum computing chip on December 9, the market reacted strongly. Since the chip's release, Alphabet's stock price has risen by 7%. However, more market price fluctuations have centered on three smaller companies: Quantum Computing (QUBT.O), Rigetti Computing (RGTI.O), and D-Wave Quantum (QBTS.N), which together have a total market capitalization of less than $8 billion, but their stock prices have risen an average of 159%.
Another company involved in the field of quantum computing is IBM (IBM.N), which saw its stock price drop by 4% since Google announced the Willow chip. At least one analyst believes IBM has been overlooked by the market.
"IBM believes it is building the most comprehensive quantum solution in the world," wrote Ben Reitzes of Melius Research in a research report. "Despite some competitors big and small, their view seems to be correct."
John Preskill, director of the Institute for Quantum Information and Matter at Caltech, told Barron's that IBM has "an excellent team and has made impressive progress in scaling hardware and improving performance."
However, investors should temper their excitement. Although the Willow chip represents a technological advancement in reducing error rates, the promise of quantum computing is still years away from realization.
"There is a state of 'good enough', and there is a state of 'practical'," said Quantum Circuits Chief Scientist Rob Schoelkopf to Barron's. "To achieve practical computing, we need to significantly reduce error rates."
Market research firm IDC predicts that total commercial sales of quantum computing will reach $8.9 billion by 2028. This is equivalent to 16 days of iPhone sales or 13 days of Google advertising revenue.
Even this relatively conservative estimate may be overly optimistic. "I am skeptical, but I would be happy if proven wrong," said physicist Steven Girvin from Yale University's quantum institute to Barron's. "The current progress is indeed very rapid, but the goal remains quite distant."
Even in a bullish report, Melius clearly pointed out that this is not a project that will quickly generate revenue growth.
"We predict that quantum technology could bring billions of dollars in revenue and profits to IBM in the 2030s, and our 'best guess' is that its commercial value will begin to materialize in 2029," Melius wrote in a report to clients.
Preskill speculated, "It may take decades for a quantum computer capable of running multiple commercially valuable applications to be realized."
Quantum technology represents the next big leap in computing. The computers we use today are based on binary mathematics. Chips consist of billions of tiny transistors, each representing a 'bit' of data that has only two states—on or off. Quantum computers use 'quantum bits' (qubits), which can have multiple states, allowing them to process data faster, thus significantly improving performance on certain tasks (such as complex encryption, optimization, and simulation)—at least theoretically.
In a quantum storage test conducted by Google—including data storage and retrieval—the Willow chip completed a benchmark in less than five minutes, while current supercomputers would take 10 quintillion years to complete. This indicates the potential of quantum computing for certain types of tasks.
However, there are still limitations, primarily the unacceptable high error rates. While Google's Willow chip shows progress in this area, all companies need to overcome significant barriers before translating quantum computing into commercial products, and it remains unclear how long this will take.
"I will continue to say 'ten years from today' until proven wrong," Girvin said. "Just as the inventors of transistors, lasers, and atomic clocks could not foresee the uses of these devices outside the lab, I think we currently cannot fully foresee all the applications of this new technology."
Article forwarded from: Jinshi Data
