Alphabet's dominance in the quantum computing sector makes it an ideal investment choice at the present moment, with two significant justifications.
Quantum computing has been making headlines lately as several companies compete to develop some of the most advanced computers known to humanity. The possibility of these machines drastically changing everything from climate forecasting to cybersecurity encryption is tantalizing, although we're likely still a few years away from realizing these potentials.
Investors looking for a company poised to make significant strides in the field of quantum computing needn't look further than Alphabet (GOOGL 0.44%, GOOG 0.51%). Here are two reasons why Alphabet just might be the best quantum computing stock to buy right now.
1. Groundbreaking Progress
Alphabet made waves recently when they unveiled their new quantum computing processor, dubbed "Willow." In a blog from Google Quantum AI founder Hartmut Neven, he detailed two major achievements:
Error Reduction
Quantum computing bits, or qubits, can exist in multiple states simultaneously – a state that allows for faster problem-solving but also increases errors. Thanks to Willow, Alphabet was able to significantly reduce these errors. By scaling up the number of qubits, Alphabet was able to "reduce errors exponentially" that have stumped the field for nearly three decades.
Processing Breakthrough
Neven also stated that Willow was able to complete a standard benchmark computation in under five minutes, a feat that would take even the world's fastest supercomputer over 10 septillion years to accomplish – a number that far surpasses the age of the universe.
Quantum computing could unlock a plethora of benefits, including more efficient electric vehicle batteries, enhanced artificial intelligence, and significantly improved encryption capabilities. Research from BCG suggests the quantum computing market could reach $850 billion by 2040. With Alphabet's Willow processor, the company is setting itself up as a pioneer in the field and could maintain its lead for quite some time.
2. Deep Pockets and a Long-term Perspective
Alphabet announced that the impressive results from its Willow chip were the culmination of work that began more than a decade ago. The company's long-term approach and vast financial resources position it favorably against its competitors.
At the end of the latest quarter, Alphabet boasted nearly $20 billion in cash and cash equivalents and $17.6 billion in free cash flow.
With its strong financial foundation, the company can afford to play the long game when it comes to quantum computing. Some pure-play quantum computing companies may have shorter deadlines for breakthroughs or a need to generate commercial applications quicker. Alphabet can instead focus on the long haul.
But developing cutting-edge technology like quantum computing takes time. Nvidia CEO Jensen Huang recently estimated that practical applications for quantum computing could be two decades away. Alphabet themselves is hesitant to pin down a concrete timeline for commercial use with Willow.
However, with its deep pockets and willingness to invest in long-term technological advancements, owning shares of Alphabet looks like a smart move. Quantum computing could follow a similar pattern to artificial intelligence, where companies poured tons of resources into the technology for years before it finally reached a critical mass.
It seems prudent to invest in quantum computing now. With Alphabet's stock trading at a forward price-to-earnings ratio of about 22, investors can grab onto this quantum computing leader while it's relatively inexpensive.
Investors interested in finance and seeking opportunities in cutting-edge technologies might consider the potential of investing in Alphabet, given its significant strides in quantum computing. With its recent announcement of the 'Willow' processor, Alphabet has managed to reduce errors in quantum computing bits substantially, potentially revolutionizing various industries such as electric vehicle batteries, artificial intelligence, and encryption. This advancement, combined with Alphabet's financial resources and long-term perspective, offers a compelling case for potential investors looking to capitalize on the projected $850 billion quantum computing market by 2040.