I don’t know about you but Microsoft’s announcement on releasing a documentary on quantum computing is raising the hair on my arms. Microsoft’s documentary will reveal to tech enthusiasts how the software giant plans to develop its first-gen quantum computer. What a mouthful right? Some of you might be thinking “What even is quantum computing and more importantly what relevance does it have to investing?”
Today we are looking at what quantum computing is, its implications on our future and how it will affect the tech giants such as Microsoft (NYSE: MSFT), International Business Machines (NYSE: IBM), and Dell Technologies (NYSE: DELL).
What is Quantum computing ?
In a nutshell, quantum computing is the process of applying quantum mechanical phenomenon such as superposition and entanglement to computing processes.
Classic computers use transistors to process information in sequences that consist of zeros and ones (binary language). When a transistor is turned on it corresponds to a one. However, when a transistor is turned off it corresponds to a zero.
The grouping of transistors into special circuits called logic gates combined with human developed code enables classic computers to carry out calculations.
However, even some of the most powerful classic computers struggle to calculate higher-end problems. Creating unwanted inefficiencies for businesses that depend on fast processing speeds.
This is where quantum computings increased processing speeds come in to play. Unlike the normal ‘bit’ (the smallest measurement of storage in computing), quantum computers contain ‘qubits’.
Qubits enable both binary forms, 0 and 1, to co-exist. Thus, making the processing speed of quantum computers significantly higher than that of classic computers.
If you would like to learn more about quantum computing then feel free to watch this three minute video.
How will Quantum Computing affect the future ?
Quantum computing is likely to have a radical effect on most if not all our industries. A few sectors include:
- Meteorology and weather forecasting
- Ridesharing services such as Uber
- Programs such as Netflix and Spotify with their recommended lists
- Database management
- Stock market/forex algorithms
- The science community in general. We may be able to finally understand more about our origins and the existence of the universe.
The impact on Microsoft, IBM and DELL’s share price?
Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.
Now we could talk about our predicted impacts on these companies until the cows come home. However, the reality is a lot more research, prototypes and testing are needed before the first quantum computer is brought to life. Especially, as the vast capabilities of quantum computing remains unknown. With a long road ahead it’s difficult for any investor to estimate how breakthroughs in quantum computing will impact these tech behemoths.
However, in saying that, I personally believe that the hype around quantum computing will drive up Microsoft’s share price in the long run. Why? Because, the stock market is based on one thing, expectation. Thus, once more investors understand the logic and benefits surrounding quantum computing the expectation is that Microsoft becomes more efficient, more competitive and more profitable.
Also, with the media hyping up the quantum computer race it wouldn’t be surprising if MSFT, IBM and DELL all surged in the coming years. Because just imagine the market leverage one of these companies would have by creating the first quantum computer?
Therefore, the quantum computer race is likely to make the tech industry more competitive. With these tech giants reducing manufacturing costs while aggressively grabbing more market share of the other. All in the pursuit to achieve a first-mover advantage. A similar style competition is sweeping across the telecom industry as Optus, Telstra (ASX: TLS) and Vodafone/TPG fight to become Australia’s best 5G provider.
The competitive environment is already causing IBM to change its product mix. I’m quite pleased to see that IBM is diversifying and going back to its original core business of selling computers. Because IBM has not sold a physical computer since 2002. Instead, the tech giant generates most of its revenue from storage and cloud computing services.
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The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.
Written by Sergeo Domtchenko, Associate of YIG.