Quantum Dream

Investors are always on the lookout for the next big thing. But what about the big thing after the next big thing? In the technology world, that could very well be quantum computing.

Barron's Eric Savitz took a deep dive into the nascent quantum landscape in our latest cover story. For now, there are no sales or earnings to point to, just pricey R&D efforts and uncertain paths to commercialization. But that won't always be the case.

Still largely theoretical quantum computers will use the behavior of subatomic particles such as electrons to solve computationally intensive problems with huge numbers of variables. Their potentially massive computing power will have a wide range of applications in modeling and design, artificial intelligence, drug development, cryptography—and surely investing.

Eric cites a 2021 report from Boston Consulting Group that pegs the potential value creation from quantum computing at up to $850 billion, with as much as $170 billion of that going to the group of companies developing the technology. But BCG doesn't expect the industry to reach that scale until 2040 at soonest. It's a tall task to sit here today and predict the decades-out winners.

Eric writes:

The combatants include some of the biggest players in “classical” computing: Microsoft, Intel, Alphabet, Amazon.com, and IBM are all building quantum hardware, along with Japan’s Toshiba, NEC, and NTT, and China’s Baidu, Huawei Technologies, Tencent, and Alibaba.

At the other end of the scale are a handful of small firms that rode quantum hype into the public markets, mostly through special purpose acquisition company, or SPAC, mergers, including Rigetti Computing, D-Wave Quantum, and IonQ. And that’s just the tip of the iceberg: According to PitchBook, 251 quantum start-ups have together raised more than $5.4 billion in venture capital since the beginning of 2017.

Quantum computing won't send today's transistor-based computers and smartphones the way of pen and paper, rather it'll complement them for the most intensive applications.

That world is a long way off, but there's a ton of intellectual and financial capital chasing the quantum computing goal today. Learn all about it in Eric's report here.