In 2016-2017 it was pot stocks. In 2020-2021 it’s EV stocks. And in a few years, it will be quantum computing stocks.
As is often the case, there are industries that offer innovation and potential returns years before profits are made. A few years ago marijuana companies saw their share prices skyrocket as legalization crept across states. Recreational marijuana is still not legalized on the federal level. These companies have seen their share prices fall as they haven’t been able to produce revenue and profit numbers that meet analysts’ expectations.
Tesla has been on a remarkable ride the last few years. They are one of the best known electric vehicle companies. Recently, many other companies in the same space have seen astronomical growth. Examples include Workhorse Group, Nio, and Nikola. While all these companies offer great ideas, it will be years before they are able to create sustainable, high-level profits.
…the potential is so great, and the technological advances are coming so rapidly, that every business leader should have a basic understanding of how the technology works, the kinds of problems it can help solve, and how she or he should prepare to harness its potential.McKinsey & Company
Investors are often looking for the next big thing. They want to get in early to make good money. Sometimes they will get into industries before they are developed or profitable. The next big industry this may occur in is quantum computing.
What is Quantum Computing
Quantum computing might be the next big thing. It will help create computers that run faster than our current computers. This technology will be used for computers that are solving huge, complex problems. The type of problems that take days, weeks, or months for a normal computer to process. Quantum computers would be able to do the work in a fraction of the time.
Quantum computing is an area of computing focused on developing computer technology based on the principles of quantum theory, which explains the behavior of energy and material on the atomic and subatomic levels.Investopedia
Current computers encode information in bits that take the value of 1 or 0. Quantum computing uses quantum bits, also known as qubits. This allows them to exists in more than one state, so a 1 or 0 at the same time.
Industry Opportunity
Quantum computing is extremely complicated. We do not have the technology yet for it to be a viable option. Right now, quantum computers are mostly inferior to today’s computers.
Expert’s don’t expect quantum computing to be ready for a decade or so. But some experts are predicting by 2023 quantum machines could provide some advantages compared to today’s computers.
An important part of quantum computing’s success is making it accessible. Once the technology is developed, people need to be able to use these computers. Companies will need to make sure gaining access to quantum computers is not too expensive. Lower barriers to adoption will help the technology and industry grow.
Henry Ford grew his company into a giant in the early 1900s by making the Model T affordable. With a lower price, many more Americans were able to purchase his car. Quantum computers won’t be for purchase for personal use. But a lower price can help them be more affordable and allow more customers access to it.
How to Invest in Quantum Computing
While the industry is still young and not developed, investors will still look for a way of making money from it. The hardware industry related to quantum computing will grow at an impressive rate. But the real money will be in the business opportunities it can unlock.
There are countless ways quantum computing can be used. And there will only be more in the future. Some potential uses include improved batteries and carbon-capture technologies, early-stage R&D to produce newer, more effective drugs, enhanced risk analysis for banks, pricing complex derivatives, improving cybersecurity, and developing smarter vehicle routing, among other uses.
The industry already has big names invested. Honeywell believes quantum computing is a huge opportunity. They already own a machine and rent it out for other companies to use, which is currently booked for months.
Technology giant Intel is among the companies serious about developing quantum computers of their own. Startups Rigetti and IonQ are also serious about creating their own computers.
IBM announced that over 100 organizations are now working with the company’s quantum computers.The Motley Fool
Microsoft and Amazon are already telling their business customers of Azure and AWS they will offer them the use of quantum computers. Microsoft and Amazon do not currently have any plans to develop their own quantum computers but will partner with companies that have computers available.
Zapata computing, a software company based out of Boston helps customers create algorithms needed for quantum computers.
Google has already claimed to have achieved quantum supremacy. This would mean a quantum computer outpaced a classical super-computer. IBM has disputed the results but it is only a matter of time before the industry is front-page news, like Tesla, and anything related to it is in an over-hyped bubble.