What a week for tech stocks.
A sci-fi-level technology known as “quantum computing” is fast becoming a reality, and certain stocks in the field have seen explosive gains in the last week.
Quantum computing is based on the science of quantum mechanics — a theory in physics that deals with our world at the subatomic level. And things at the subatomic level operate a little differently than we understand them.
Where bits in the observable world are only 0’s or 1’s, bits in the quantum world (also known as “qubits”) can be 0’s, 1’s or 0’s and 1’s simultaneously.
If that concept makes your head spin, don’t worry about it; you don’t have to completely understand a new technology to potentially make a ton of money investing in it.
You can bet that most early IBM investors didn’t know exactly how its revolutionary, world-changing microprocessor technology worked … but those investors were able to see extraordinary gains as computing took over the world.
This new quantum computing tech has the same world-changing potential (maybe even more) as the microprocessor — and this rapidly developing technology is leading to some exciting opportunities for investors.
Here are three ways to play the trend … plus one bonus “sleeper” play for investors looking for aggressive growth potential.
Quantum Play #1: The 800-Pound Gorilla
For investors interested in doing some more due diligence in the area of quantum computing, here are three places to look for opportunity.
For those looking for the safest play in this up and coming field, look no further than Google (GOOG).
Google has been at the leading edge of quantum computing for years. And recently they just announced a major breakthrough in their technology.
One of the challenges that comes with this new quantum tech is the ability to scale it. Adding more and more qubits to a process increases the number of errors that are likely to occur. (This has been a challenge in the field since 1995.)
It appears that Google has finally designed a breakthrough with its latest quantum processor known as Willow. According to an article in Nature Magazine…
Researchers at Google have built a chip that has enabled them to demonstrate the first ‘below threshold’ quantum calculations — a key milestone in the quest to build quantum computers that are accurate enough to be useful.
“Below threshold” calculations drive the number of errors down, while scaling up the number of qubits processed.
According to a recent blog post by Hartmut Neven, the founder of Google Quantum AI:
Willow performed a standard benchmark computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion (that is, 1025) years — a number that vastly exceeds the age of the Universe.
You read that right. Willow did in five minutes what it would take the most advanced supercomputer today 10,000,000,000,000,000,000,000,000 years to do.
And it did it while reducing the number of errors that occurred.
Needless to say, this is a HUGE breakthrough for Google.
Quantum Play #2: Leveraging Light Waves
For those looking for a more aggressive play, look no further than what’s becoming the hottest quantum stock in the market today… Quantum Computing Inc. (QUBT).
While Google is busy scaling, QCi has been attempting to carve out its own niche in the quantum field using a technology known as thin-film lithium niobate (TFLN) chips that leverage nonlinear quantum optics.
That’s a mouthful, but what it basically means is that QCi’s technology uses light to generate qubits. Where a computer today can only understand bits where a light is on or off, qubits generated from light can act like a dimmer switch. They can be on, off or anything in between. Nonlinear quantum optics is the science that allows their technology to create and work with these qubits.
While the company is relatively small — its market cap is only around $2 billion — it has recently announced multiple orders for their tech.
The first came from an unnamed “prominent research and technology institute based in Asia.” A week later they announced a second purchase order from the University of Texas at Austin.
And even more recently…
While the specifics of the orders weren’t completely clear in the press releases, the company’s share price exploded over 1,100% in the last month on the news.
Quantum Play #3: The Wild Card
Investors interested in more of a pure quantum play could look into Rigetti Computing (NASDAQ: RGTI).
The California-based quantum computing pioneer had a lot to be thankful for in late November as its stock popped following news that it had raised $100 million in a direct offering.
And that wasn’t the only good news coming out of Rigetti this year. It also announced that it had installed a 24-qubit quantum computer in the UK’s National Quantum Computing Centre.
As of this writing, the company’s stock is up more than 928.85% over the last 6 months, but analysts are mixed as to whether Rigetti is hitting a roof or if the company still has room to grow.
But with $100.5 million in cash reserves, growing partnerships worldwide, and fresh interest in its industry-leading quantum services, Rigetti could make a very compelling investment opportunity for the right investor.
Bonus Play: The Quantum “Sleeper”
Finally, if you’re an investor with a bit more risk appetite looking for an under-the-radar small-cap company that’s targeting a critical area in the quantum field, you might want to investigate Scope Technologies Corp. (OTCQB: SCPCF; CSE: SCPE).
Scope Technologies is a Canadian-based company that has developed, among other things, quantum-proof encryption technology.
This is no small area when it comes to the prospects of quantum computing. The prospect of calculating at quantum speeds offers the potential for amazing benefits. But it also brings with it the potential for enormous threats.
Consider what Google’s Willow chip just did — it performed a benchmark calculation in five minutes that an advanced supercomputer would take 10 septillion years to do.
Now think of that in terms of today’s computer security.
Cybersecurity company Hive Systems created a table estimating how long it would take a sophisticated hacker today to crack passwords of various lengths and complexities…
The bottom right corner shows the strongest password combination would take roughly 26 trillion years to beat.
That’s probably two-and-a-half minutes in Willow’s quantum time.
As the power of quantum computing becomes more and more mainstream, the need for equally powerful cyber defenses will skyrocket.
Streetlight Confidential Senior Editor Tim Collins has put together an in depth research report on the topic that you can access here.
Scope Technologies is a small firm — only about $45 million as of this writing — and, unlike the other stocks listed above, its stock hasn’t seen a ton of upward momentum yet. But the company has great potential in an area that will be more and more critical as this technology evolves.
AI may be the tech darling of the day, the future of tech (and investors’ bottom lines) is shaping up to be in the quantum realm.
