Investing in quantum computers: For many years, there has been a lot of talk about quantum computers with claims like “this will change the world, it’s technological progress.” But time goes by, news about quantum computers keeps coming out regularly, yet the world remains unchanged. So, what’s the real situation and when can we expect this technological leap?
What is a quantum computer?
Until now, we’ve relied on supercomputers to solve most complex problems. These are very large classical computers, often with thousands of classical cores. However, supercomputers aren’t great for solving certain types of problems that might seem simple at first glance. That’s where Quantum Computers come in.
Imagine you want to seat 10 people at a table with only one optimal seating plan among all possible combinations. How many different combinations do you need to consider to find the optimal one? Seating 2 people requires 2 combinations. 5 people create 120 combinations. Seating 10 people at one table would require examining 3,628,800 combinations.
Just 10 people and one table create over 3 million combinations. Now think about the number of combinations for larger values, like 100 people, 1000 people, or even 10,000 people—these calculations are beyond the capability of classical computers. Supercomputers have to analyze each combination one by one, which can take a long time. Some calculations could take billions of years. This is where quantum computers come to the rescue, capable of significantly reducing the time for complex calculations. A week of work for a supercomputer equals just 1 second for existing quantum computers.
Principles of Quantum Computing
Quantum computers operate based on two principles of quantum mechanics: entanglement and superposition.
Classical computers use a binary system of 1s and 0s (bits), where each combination of 1s and 0s represents specific data. A processor can transmit either a 1 or a 0. The principle of superposition allows elements of the processor to exist simultaneously in both states—1 and 0, like a coin tossed in the air that can be both heads and tails until it lands. A bit that can be in a state of 1 and 0 simultaneously is called a qubit. The more qubits there are, the more simultaneous calculations can be performed. Currently, there are efforts to develop computers based on photons of light with capabilities of up to 1,000,000 qubits, though current quantum computers created by companies typically have 20-50 qubits.
For a quantum computer to operate, qubits must be interconnected and function as a single system, managed by entanglement. These properties of quantum computers enable them to simultaneously analyze millions of different possibilities and combinations. For example, in the table seating scenario, a quantum computer can find the optimal seating arrangement in seconds. Applied to the evolution of life on Earth, a quantum computer can quickly identify viable combinations of complex organic molecules—tasks that nature took billions of years to solve.
Now, the search for such combinations is accessible through artificial means via quantum computations. With the advent of more powerful quantum computers, we may eventually model the potential existence and interactions of all substances and elements. Source: IBM Quantum
Areas of Application for Quantum Computing
Similar to traditional computers, quantum computing (QC) has an incredibly broad range of applications, and we’re only beginning to understand its full potential, which will impact nearly every sphere of human activity.
Aerospace Industry:
QC is essential for complex calculations involving flight trajectories and loads with a vast number of variables.
Cryptography:
QC will not only discover methods to decrypt all possible encodings but also innovate new quantum encryption methods, enhancing cybersecurity.
Artificial Intelligence:
With QC, artificial intelligence will advance significantly, analyzing millions of potential event developments.
Logistics:
Transport companies delivering to dozens or hundreds of cities can determine optimal routes to save on fuel costs.
Investments:
Through intricate calculations, QC can balance the risks of investment portfolios and predict possible volatility.
Ecology:
QC can contribute to reducing carbon emissions by discovering new materials.
Oil Companies:
Modeling deposits and efficient extraction methods.
Chemistry:
QC’s ability to precisely model molecular reactions down to the subatomic level is crucial for everything from drug discovery to creating new generations of lightweight, durable batteries. Many chemists realize that traditional lab research can take months or even years to understand chemical processes inside a flask and learn to control them. Quantum computing promises to accelerate this.
Some tasks are inefficiently performed even on the most powerful modern supercomputers. QC will help discover and synthesize new substances to replace inefficient or harmful substances currently in use. This could change everything from the composition of plastic bags to the charging speed of electric vehicles.
Pharmacology:
Advanced computations enable modeling complex protein interactions. One of the main challenges in drug discovery is finding substances that neutralize harmful proteins in our bodies, known as inhibitors. To identify useful combinations, hundreds of millions of interaction combinations need to be simulated. Complex protein molecules complicate the search for drugs. With powerful quantum computers, humanity could find all possible inhibitors of harmful proteins.
This could lead to discovering cures for currently incurable diseases and make treating any disease more effective. Using QC can reduce drug development time; many drugs currently take 5-10 years to develop, but with QC technologies, this time could be shortened to 1-2 years. Applying QC in pharmacology will elevate our ability to combat diseases to a new level.
Source:
IBM Quantum, Honeywell Quantum Solutions. Report by Dr. V.B. Sulimov, Ph.D. in Physics and Mathematics, NIVC MSU “Supercomputers in Medicine,” October 28, 2009.
Market Analysis: Leaders in Quantum Computing
According to the latest industry analysis by Persistence Market Research, the market revenue for quantum computing reached $6.9 billion in 2021. Projected to grow significantly at a rate of 33.7% from 2021 to 2031, the market estimation is expected to surpass $127.4 billion by 2031.
Persistence Market Research reports that quantum computing solutions generated $5.6 billion in revenue in 2020. In terms of value, the service segment is identified as the fastest-growing segment, projected to have the highest average annual growth rate of 39% over the next decade.
Here are some of the leading companies in the field of quantum computing:
IBM Quantum: IBM is a global leader in quantum computing, focusing on solving complex problems that even the most powerful supercomputers cannot tackle.
D-Wave Systems Inc: They create and deliver quantum computing systems, cloud services, application development tools, and professional services to support continuous quantum computing processes for enterprises and developers.
Microsoft: Provides access to diverse quantum software, hardware, and solutions through Microsoft and its partners.
Google: Advances modern quantum computing technologies and develops tools that allow researchers to work beyond classical capabilities.
Intel: Involved in the development of quantum computing.
Atom Computing, Inc: Creates scalable quantum computers from individual atoms.
Xanadu Quantum Technologies Inc: Manufactures scalable quantum computers, offering a fully managed quantum cloud service with direct access.
Strangeworks, Inc: Provides all quantum tools needed in a unified user interface.
IonQ: Manufacturer of compact, widely usable quantum computers.
Quantum Circuits, Inc: Designs scalable quantum computers.
Huawei: High-performance cloud platform for large-scale quantum circuit modeling based on powerful computational and storage infrastructure in HUAWEI CLOUD.
Rigetti: Integrates systems and creates quantum computers and superconducting quantum processors. Their Quantum Cloud Services (QCS) platform enables integration into any public, private, or hybrid cloud.
Honeywell: Develops quantum computers with high-quality qubits.
These companies are at the forefront of advancing quantum computing technologies, each contributing uniquely to the evolving landscape of this transformative field.
Source: IBM Quantum, D-Wave Systems Inc, Microsoft, Google, Intel, Atom Computing, Xanadu Quantum Technologies Inc, Strangeworks Inc, IonQ, Quantum Circuits Inc, Huawei, Rigetti, Honeywell.
Quantum Computers and the Stock Market
Companies involved in Quantum Computing (QC) can be divided into 2 groups, each with its own characteristics and investment approach.
The first group consists of QC manufacturers. These are companies engaged in the development and production of quantum hardware and software. Within this group, there are 2 categories.
The first category includes large technology companies. These companies have enormous capitalization, with QC being just one of their business divisions. Therefore, developments in quantum technology are unlikely to significantly affect their overall market value. Examples include Google, IBM, Honeywell, Intel, and Microsoft.
The second category comprises small startups whose sole focus is on QC development, software, and providing access to their and others’ computing power. These companies typically have low capitalization but high growth potential. Examples include IonQ, Atom Computing, D-Wave, and Rigetti.
The second group includes companies utilizing quantum computing in their technologies and research. Within this group, there are also 2 categories:
- Companies using quantum computing to enhance the efficiency of existing technologies. For instance, oil companies simulate reservoir volumes and efficient extraction methods. While they can’t extract more oil than is physically present, they can maximize a reservoir’s potential efficiently. In other words, this enhances efficiency in established markets. Companies like Exxon Mobile, Boeing, Daimler, JP Morgan Chase, Goldman Sachs, and Accenture fall into this category.
- Companies leveraging quantum computing to develop new technologies and products. This category includes pharmaceutical and chemical companies. By using quantum computing, they aim to discover effective medications for various diseases and create new materials with unique properties, leading to breakthroughs and substantial profit growth. Mitsubishi Chemical is an example of such a company.
What to Buy in the Stock Market
In the field of quantum computing (QC), several notable companies are present:
- Honeywell (HON)
- IBM (IBM)
- Google (GOOGL)
- Microsoft (MSFT)
- Intel (INTC)
These are massive corporations whose profitability may be challenging to significantly increase due to their already substantial market capitalization, which surpasses that of the entire QC market. Therefore, the focus should be on investments that promise maximum future returns.
You might consider betting on:
- Startups in the quantum computing sector with smaller market capitalization.
- Companies leveraging QC for breakthrough technology and material developments.
On October 1, 2021, IonQ became the first publicly traded company in the quantum computing field. IonQ merged with dMY Technology Group, Inc. III (NYSE: DMYI.U) via SPAC. Following the transaction, IonQ’s shares trade on the NYSE under the symbol “IONQ,” with an estimated market capitalization of approximately $2 billion USD. IonQ develops quantum computers accessible through cloud platforms like Amazon Braket and Microsoft Azure. By 2023, IonQ plans to introduce modular quantum computers that can be networked, potentially leading to significant quantum advantages by 2025.
On June 8, 2021, Honeywell (NASDAQ: HON) announced that Honeywell Quantum Solutions (HQS) and Cambridge Quantum Computing (CQC), two leading enterprises in the QC and quantum technology sectors, would merge to form the world’s largest publicly traded autonomous QC company. They project the industry’s volume to reach $1 trillion in the coming decades. The merger is expected to conclude in Q3 2021, with no specific market debut date yet.
On October 6, 2021, Rigetti Computing, a leader in QC, announced plans to go public through a merger with Supernova Partners Acquisition Company II. They began trading under the ticker RGTI on March 2, 2022.
In the coming months, D-Wave plans to go public, so it’s worth keeping an eye on the news. The future is unfolding today, with ongoing developments and research across various industries. Collaborations are already underway, such as IBM and Mitsubishi Chemical studying how quantum computers can simulate chemical reactions at the molecular level.
Mitsubishi Chemical
Mitsubishi Chemical, Keio University, and IBM Quantum are exploring the potential of lithium-oxygen as an energy source using new algorithms leveraging quantum computing advantages. Research has already yielded calculations on complex chemical reactions in lithium-oxygen batteries.
Engineers from Daimler AG, the parent company of Mercedes-Benz, are working with IBM on more energy-efficient lithium-sulfur (Li-S) battery technologies.
Entropica Labs
Entropica Labs, a Singapore-based quantum software development startup, and BMW Group are teaming up with Honeywell Quantum Solutions to study supply chains and logistics for a global luxury car manufacturer.
Researchers from Goldman Sachs, IonQ, and QC Ware have demonstrated how a mathematical method underlying financial risk analysis can perform better and faster on a quantum computer than on a traditional one.
Cambridge Quantum Computing
Cambridge Quantum Computing has collaborated with Nippon Steel Corporation to model the behavior of iron crystals in two different configurations. This chemical modeling is so complex that scientists cannot accurately perform it on a conventional computer.
Samsung
Samsung, known for its Galaxy phones, tablets, and other devices, has recently partnered with Honeywell Quantum Solutions and physicists from Imperial College London to explore using quantum computing to develop more advanced batteries.
These are just a few examples of industry partnerships and quantum computing software developers beginning joint research. It’s important to note that quantum computers are still at the beginning of their technological journey. As more powerful computers emerge, humanity will be able to tackle increasingly complex challenges.
Previous Experience
The topic of quantum computers has existed in the scientific community for a long time, and only now is their use entering our world. These breakthrough technologies are attracting the attention of investors and speculators alike. However, excessive popularity could play a cruel trick, akin to the dot-com boom of the 1990s in the USA.
During the dot-com era, with the popularization of the internet, companies rushing to create their own websites led to a speculative frenzy. Traders believed that having an internet presence would boost a company’s sales. This belief became uncontrollably frenzied, driving stock purchases of companies that simply had a website as if they were hot cakes. Such buying frenzies pushed the market to unprecedented heights, ultimately leading to the dot-com crisis and stock market crash.
Similarly, with the idea of incredible progress through quantum computers in business, the popularization of this theme could lead to a dot-com-like effect. Despite IBM’s websites describing the technology as groundbreaking for many sectors, the hype surrounding quantum computing could provoke a powerful wave of stock purchases in related companies.
Just as having “blockchain” in a company’s name led to panic buying in 2016-2018, the term “quantum” could drive traders to buy stocks. As a result, we might see another speculative bubble forming.
Results
Quantum computing has already become a part of our lives, but this industry is still in its early stages. Research and development are just beginning. This is the best time to start investing.
The market potential for quantum computing and the outcomes of scientific research are still largely untapped. With the emergence of companies specialized in this field, it will attract significant attention from traders and investors. This means that the stock prices of quantum computing companies are likely to rise.