Alphabet Inc. (GOOG) shares surged 6.3% on Tuesday, marking their biggest gain since October. This was after the announcement of an important quantum computing milestone.
Google’s parent company introduced the Willow quantum processor, claiming that it could solve problems within five minutes what would take supercomputers ten septillion years to do.
This breakthrough highlights Google’s decade-long dedication to quantum computing. The journey was initiated by CEO Sundar Pichai with the establishment in 2012 of Google Quantum AI.
Alphabet’s shares surged to their highest level in July after the announcement, adding to a 25% rally since a September low. By 11:10 AM GMT+5, Alphabet shares had lost some of their gains but were still trading higher by 3.8%.
Why is the Willow quantum-chip a breakthrough?
Pichai introduced Willow on X as a breakthrough that “can reduce errors exponentially when we scale up by using more qubits. This is a 30-year-old challenge in the field”.
Willow has achieved a milestone by completing a benchmark computation in under five minutes. This task would take today’s supercomputers 10 septillion years (1025), which is a time span far exceeding the age of the Universe.
The program aims at harnessing the principles of quantum physics to drive scientific progress as well as tackle global challenges.
Elon Musk, the CEO of Tesla, responded to the announcement with a simple word “wow” on the social media platform X. This underscored the enormity of Google’s achievement within the quantum realm.
Analysts have praised this breakthrough as a pivotal move towards the commercialization quantum computing.
Colin Sebastian, an investor at Baird, noted while widespread adoption of quantum technologies is still years away from now, Willow highlights Alphabet’s technological leadership.
Bloomberg Intelligence said that quantum advances could enhance AI training, inferencing and Alphabet’s chip edge over other tech giants.
Small Quantities Ride the Wave
Alphabet’s announcement had a ripple effect on other quantum-related stocks.
In Tuesday’s trading, Rigetti Computing surged 29%. D-Wave Quantum, IonQ, and D-Wave Quantum gained 6.7%, 5.4% and 6.7%, respectively.
Rigetti’s impressive 600% increase since September demonstrates the growing interest of investors in quantum technology.
Alphabet also attracted a lot of options traders, with nearly 400,000 call options being traded by midday, which is five times more than the volume of put option trades.
This spike is a sign of optimism regarding Alphabet’s ability to leverage quantum computing technologies for long-term growth.
Challenges and Opportunities Ahead
Alphabet is not without its challenges, including antitrust suits.
The potential ban on TikTok by the US in 2025 may also have limited benefits for Alphabet’s YouTube.
Analysts estimate that each 10% of TikTok’s reallocated users engagement could add $921,000,000 in YouTube revenue. Profitability gains would, however, be modest due lower margins.
Alphabet’s stock is up about 32% as the year ends. This is a slight improvement over the S&P 500, which has grown by around 28%.
It continues to lag behind the “Magnificent 7” tech giants, except for Microsoft and Apple. This shows that, while quantum breakthroughs may be promising, larger challenges still loom.
This post Alphabet jumps most since October on Willow quantum chips breakthrough may be updated as new information unfolds
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