Three small computer companies engaged in quantum computing have seen their stock values surge significantly.
Quantum computing stocks are rapidly rising, but investors need to be mentally prepared for a long-term hold.
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 release of the chip, Alphabet's stock price has risen by 7%. However, more market price fluctuations have concentrated on three smaller companies: Quantum Computing (QUBT.O), Rigetti Computing (RGTI.O), and D-Wave Quantum (QBTS.N), which collectively have a market capitalization of less than $8 billion, but their stock prices have risen an average of 159%.
Another company involved in the quantum computing field is IBM (IBM.N), whose stock price has fallen 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 world's most comprehensive quantum solution," Ben Reitzes of Melius Research wrote in a research report. "Despite some competitors, big and small, their perspective seems to be correct."
John Preskill, director of the Institute for Quantum Information and Matter at Caltech, told Barron's that IBM has "an outstanding team and has made impressive strides in scaling hardware and improving performance."
However, investors should temper their enthusiasm. Although the Willow chip represents a technological advancement in reducing error rates, the promises of quantum computing are still several years away from being realized.
"There is a state of 'good enough' and then there's a state of 'practical,'" Quantum Circuits Chief Scientist Rob Schoelkopf told Barron's. "To achieve practical computing, we need to significantly reduce the error rates."
Market research firm IDC predicts that by 2028, the total commercial sales of quantum computing will reach $8.9 billion. This is equivalent to 16 days of iPhone sales or 13 days of Google's ad revenue.
Even this relatively conservative estimate may be too optimistic. "I'm skeptical, but I'd be happy to be 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 is still quite distant."
Even in a bullish report, Melius clearly stated that this is not a project that will bring revenue growth quickly.
"We predict that quantum technology may bring IBM billions in revenue and profits 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 before a quantum computer capable of running multiple commercially valuable applications is operational."
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 with only two states — on or off. Quantum computers use 'quantum bits' (qubits), which can have multiple states, allowing them to process data faster, significantly improving performance on certain tasks (such as complex encryption, optimization, and simulation) — at least theoretically.
In a quantum storage test conducted by Google — involving both data storage and retrieval — the Willow chip completed a benchmark test in less than five minutes, while current supercomputers would take 10 quintillion years to complete. This indicates the potential of quantum computing in certain types of tasks.
However, limitations remain, primarily the unacceptably high error rates. While Google's Willow chip has shown improvements in this area, all companies need to overcome significant hurdles before turning quantum computing into commercial products, and it remains unclear how long this will take.
"I will continue to say 'the next 10 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 laboratory, I believe we also cannot fully anticipate all applications of this new technology at this time."
Article forwarded from: Jinshi Data