Quantum Computing

Quantum Computing: How To Invest In It, And Which Companies Are Leading the Way?

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“Insight must precede application.” ~ Max Planck, Father of Quantum Physics

Quantum computing is no ordinary technology. It has attracted huge interest at the national level with funding from governments. Today, some of the biggest technology giants are working on the technology, investing substantial sums into research and development and collaborating with state agencies and corporates for various projects across industries.

Here’s an overview of quantum computing as well as the players exploring this revolutionary technology, and ways to invest in it.

Understanding Quantum Computing

Let’s begin with understanding quantum computing. While standard computers are built on classical bits, every quantum computer has a qubit or quantum bit as its building block. Thus, unlike a classical computer where information is stored as binary 0 or 1 using bits, a quantum computer harnesses the unique ability of subatomic participles in the form of a qubit which can exist in superposition of 0 and 1 at the same time. As a result, quantum computers can achieve higher information density and handle very complex operations at speeds exponentially higher than conventional computers while consuming much less energy.

It is believed that quantum computing will have a huge impact on areas such as logistics, military affairs, pharmaceuticals (drug design and discovery), aerospace (designing), utilities (nuclear fusion), financial modeling, chemicals (polymer design), Artificial Intelligence (AI), cybersecurity, fault detection, Big Data, and capital goods, especially digital manufacturing. The productivity gains by end users of quantum computing, in the form of both cost savings and revenue opportunities, are expected to surpass $450 billion annually.

“It will be a slow build for the next few years: we anticipate value for end users in these sectors to reach a relatively modest $2 billion to $5 billion by 2024. But value will then increase rapidly as the technology and its commercial viability mature,” reports BCG.  

The market for quantum computing is projected to reach $64.98 billion by 2030 from just $507.1 million in 2019, growing at a CAGR of 56.0% during the forecast period (2020–2030). According to a CIR estimate, revenue from quantum computing is pegged at $8 billion by 2027.

Which Nations Are Investing In Quantum Computing?

To gain the quantum advantage, China has been at the forefront of the technology. The first quantum satellite was launched by China in 2016. A paper by The Center for a New American Security (CNAS) highlights how, “China is positioning itself as a powerhouse in quantum science.”

Understanding the strategic potential that quantum science holds, U.S., Germany, Russia, India and European Union have intensified efforts towards quantum computing. In the U.S., President Trump established the National Quantum Initiative Advisory Committee in 2019 in accordance with the National Quantum Initiative Act, signed into law in late 2018, which authorizes $1.2 billion to be spent on the quantum science over the next five years.

The Indian government in its 2020 budget has announced a National Mission on Quantum Technologies & Applications with a total budget outlay of INR 8000 crore ($1.12 billion) for a period of five years while Europe has a €1 billion initiative providing funding for the entire quantum value chain over the next ten years. In October 2019, the first prototype of a quantum computer was launched in Russia while in Germany, the Fraunhofer-Gesellschaft, Europe’s leading organization for applied research, partnered with IBM for advance research in the field of quantum computing.

The Companies Leading the Way

IBM has been one of the pioneers in the field of quantum computing. In January 2019, IBM (IBMunveiled the IBM Q System One, the world's first integrated universal approximate quantum computing system designed for scientific and commercial use. In September it opened the IBM quantum computation center in New York to expand its quantum computing systems for commercial and research activity. It has also recently invested in Cambridge Quantum Computing, which was one of the first startups to become a part of IBM’s Q Network in 2018.

In October 2019, Google (GOOGGOOGL) made an announcement claiming the achievement of "quantum supremacy." It published the results of this quantum supremacy experiment in the Nature article, “Quantum Supremacy Using a Programmable Superconducting Processor.” The term "quantum supremacy" was coined in 2012 by John Preskill. He wrote, one way to achieve quantum supremacy would be “to run an algorithm on a quantum computer which solves a problem with a super-polynomial speedup relative to classical computers.” The claim was countered by IBM.

Vancouver, Canada headquartered D-Wave is the world’s first commercial supplier of quantum computers and its systems are being used by organizations such as NEC, Volkswagen, DENSO, Lockheed Martin, USRA, USC, Los Alamos National Laboratory and Oak Ridge National Laboratory. In February 2019, D-Wave announced a preview of its next-generation quantum computing platform incorporating hardware, software and tools to accelerate and ease the delivery of quantum computing applications. In September 2019, it named its next-generation quantum system as Advantage, which will be available in the Leap quantum cloud service in mid-2020. In December 2019, the company signed an agreement with NEC to accelerate commercial quantum computing.

Amazon (AMZNintroduced its service Amazon Braket in late 2019, which is designed to let its users get some hands-on experience with qubits and quantum circuits. It allows to build and test circuits in a simulated environment and then run them on an actual quantum computer.

Around the same time, Intel (INTCunveiled a first-of-its-kind cryogenic control chip — code-named “Horse Ridge”—that will speed up development of full-stack quantum computing systems.

In addition, companies such as Microsoft (MSFT), Alibaba (BABA), Tencent (TCEHY), Nokia (NOK), Airbus, HP (HPQ), AT&T (T) Toshiba, Mitsubishi, SK Telecom, Raytheon, Lockheed Martin, Righetti, Biogen, Volkswagen and Amgen are researching and working on applications of quantum computing.

Final Word

Investors looking to invest in the technology can either look at individual stocks or consider Defiance Quantum ETF (QTUM) to take exposure to companies developing and applying quantum computing and other advanced technologies. Launched in April 2018, QTUM is a liquid, low-cost and efficient way to invest in the technology. The ETF tracks the BlueStar Quantum and Machine Learning Index, which tracks approximately 60 globally listed stocks across all market capitalizations.

While quantum computing is not mainstream yet, the quest to harness its potential is on, and the constant progress made is shrinking the gap between research labs and real-world applications.

Disclaimer: The author has no position in any stocks mentioned. Investors should consider the above information not as a de facto recommendation, but as an idea for further consideration. The report has been carefully prepared, and any exclusions or errors in reporting are unintentional.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Prableen Bajpai

Prableen Bajpai is the founder of FinFix Research and Analytics which is an all women financial research and wealth management firm. She holds a bachelor (honours) and master’s degree in economics with a major in econometrics and macroeconomics. Prableen is a Chartered Financial Analyst (CFA, ICFAI) and a CFP®.

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