D-Wave’s status as pure-play in quantum computing could help deliver big upside, but Alphabet offers a more balanced risk-reward profile.
Alphabet has massive capital resources and has been making big breakthroughs in quantum-computing tech.
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D-Wave Quantum has been making waves in the quantum-computing space. The company’s focus on quantum-annealing technologies have enabled it to achieve more rapid commercialization compared to many other pure-play companies in the space, and the business has been posting encouraging sales growth that could point to explosive long-term opportunities.
In the third quarter, D-Wave’s revenue roughly doubled to reach $3.7 million. Meanwhile, sales across the first three quarters of the year came in at $21.8 million — representing annual growth of 235%. Despite encouraging growth and mounting real-world applications for its quantum tech, investors could be better served by investing in a much larger player in the space.
Image source: Getty Images.
D-Wave’s quantum-annealing tech platform is further down the commercialization pathway compared to the universal gate-based quantum computers favored by Rigetti Computing and some other players. While the overall progression of the quantum-computing industry over the next decade remains highly speculative, D-Wave’s approach appears to be delivering a balance that provides usefulness in current real-world applications and the potential for explosive growth with new tech breakthroughs. On the other hand, D-Wave stock is still an incredibly speculative, high-risk play.
While pure plays like D-Wave and Rigetti could deliver massive gains if their respective technologies take off, investors shouldn’t sleep on Alphabet’s (NASDAQ: GOOG) (NASDAQ: GOOGL) potential to be a massive quantum-computing winner. In addition to having capital and computing resources that dramatically exceed smaller players in the category, the tech giant has already been posting eye-catching tech breakthroughs that suggest it’s at the forefront of the category.
Last year, Alphabet’s Google Quantum AI unit unveiled its Willow chip — a quantum-computing processor that was able to significantly reduce the incidence of errors as more qubits were added. With the Willow chip, Alphabet has been able to solve specialized problems in less than five minutes that would have been effectively impossible for other top supercomputers.
Through continued testing and iteration of the Willow chip, Google Quantum AI recently announced that it had achieved another major breakthrough. While quantum computing technologies offer far superior results for some very specialized applications, continued advancements are needed before the tech will have widespread real-world use cases. But Google’s October announcement that it ran a verifiable algorithm on Willow-based hardware 13,000 times faster than would be possible on even the world’s fastest classical supercomputers suggests that Alphabet could have big advantages when it comes to launching and scaling real-world quantum applications.
Given Alphabet’s massive resources and ability to integrate quantum-computing technologies across its existing tech stack, the company could be one of the smartest plays for investors seeking exposure to the quantum trend.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
Move Over D-Wave, Alphabet Is Taking Over Quantum Computing was originally published by The Motley Fool