The Moore’s Law has ruled over microprocessors since 1965. It states that the number of transistors in a dense integrated circuit doubles every two years. Although an empirical law not ruled by physics, it has proven to be truth for 55 years now. During the last few years it has been in jeopardy, as a matter fact we might be entering the last decade that this law will be relevant for PCs with the birth of Quantum Computing.
Quantum Computing bets on the quantum mechanical phenomena like superposition and entanglement to compute. Whereas nowadays computers rely on the binary system, 0s and 1s (0 means no voltage on the transistor, 1 means the opposite); this new breed of computers would rely on Qubits instead of Bits, as the previously mentioned superposition and entanglement allow for these to have multiple states at the same time. Rather than the traditional positions of 0/1 in quantum the qubits could have the values of: 0,0/0,1/1,0/1,1. This simple difference would exponentially multiply today's computing capacity. Achieving these necessary phenomena to make it viable is complicated to say the least having to run these computers nearby absolute zero, 0 degrees Kelvin or -273.15 Celcius, lucky for us some of the world must successful companies are investing heavily on it with already promising results. Making it an emerging industry set to explode in the next 10 years.
Where to invest?
IBM (IBM, - Solvable, steady, marching to the future. IBM is one of those companies that need no introduction in technology sector, they have been around and innovating since 1911. They are a healthy and steady company with an excellent balance sheet and a very attractive 5.20% dividend yield. Big Blue’s bet on this new technology is not as flamboyant as others, they are however involved not only on the hardware development, but they have positioned themselves among the community with IBM Q Network which provides support and social interactions for researchers, educators, business and developers. Additionally, through their cloud infrastructure allows this network to have access to their quantum hardware.
ALPHABET (GOOGL, GOOG) - Google and NASA partnership is already taking off. In partnership with NASA, Google Research claimed in 2019 that they were close to “Quantum Supremacy” (published by Google researchers on Nature on November 2019), on which using their former top of the line Sycamore, 54-qubit quantum processor (since the announcement Google launched Bristlecone a 72-qubits unit) was able to solve computational problems that nowadays computer would take around 10,000 years to resolve. The claim has been refused by others in the industry but it is safe to say that their AI approached research is on a good path to develop stable quantum computers. Google solid P/E ratio of 29.49, their $1 trillion USD market cap and their Strong Buy recommendation from most analysts, makes this venture a more secure investment, moreover, if Google does indeed achieve Quantum Supremacy the possibilities of growth are unbelievable.
MICROSOFT (MSFT) - Q# and Azure Quantum. Microsoft's transformation under Satya Nadella should be studied on business school for the next decades. They have found their path and mission; and the road has led them to being back in the forefront of technology and innovation. In the case of quantum, they are no exception. Powered by Azure Quantum, which on Satya’s words is a “full stack, cloud base approach to quantum computing”, with a strong network of collaborators and a development tool like Q# (Microsoft response to Quantum programming language) they are already sailing through these first days of a new industry. Not much to say about the stability the Redmond company, another $1 trillion dollar company that is enjoying growth across their top 3 pillars of growth, Azure, Office 365, and XBOX/gaming. Nice to add that their stock has a 29.3% YTD return. Now imagine if they break the soil on quantum what it could mean for its stock.
Amazon (AMZN) - The world’s most valuable company has also taken positions in this industry by leveraging the power of their world renown Amazon Web Services (AWS) to provide companies and individuals access to D-Wave, IonQ and superconducting chips from Rigetti, all three top of the line Quantum computers today. Another Bezos home run? I would not bet against the guy.
Alibaba (BABA) - In partnership with the Chinese Academy of Science Alibaba is in developing of superconducting quantum computer in their Hangzhou headquarter. Their goal is to make it safe and scalable, they already have an 11 qubit prototype that seems promising. Looking to be front and present of the technology industry and with a lot of cash to do so, Alibaba could very much achieve their goal.
The Defiance Quantum ETF (QTUM) - It offers a more affordable, liquid and transparent access to companies in the industry by following the BlueStar Quantum Computing and Machine Learning Index (BQTUM). As imagined, it is a very tech heavy ETF that has a 21.83% return in the quarter.
Quantum is a new exciting industry that has the potential to rock today's world and making today supercomputers look the room size computers of 1950 that were less powerful than our smartphones. The possibility to invest in a new emerging technology like this does not come every day. I do believe that we are living the last decade of Moore’s Law and the disruption the computer industry as we know it. I highly encourage you all to read more about it make your own decisions.
Disclaimer: I am long on AMZN. I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article. All information should be independently verified and should not be relied upon for purposes of transacting securities or other investments. See terms for more info.