On Monday, Alphabet Inc. (GOOGL), Google’s parent company, unveiled its latest quantum chip – Willow. This new chip solved a benchmark computation that would have taken the most advanced supercomputer ten septillion years in under five minutes. The market reacted swiftly, with GOOGL shares climbing over 12% since last Monday. Although quantum computing is still far from being used commercially, Google’s new Willow chip marks a crucial breakthrough that will likely pave the way for additional breakthroughs in the coming years.
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However, this latest advancement has placed Alphabet at a focal point in a new rising industry with an estimated market size of $850 billion by the next 16 years. Again, it must be stressed that a lot is still speculative, as we’re dealing with an industry that is just coming to life, but the potential is enormous. Quantum capabilities can, in theory, solve the most complex problems in medicine, energy, AI, transportation, and basically, all walks of life.
It’s becoming a trend to give new developments a name that correlates with pop-culture heroes, like Tesla’s (TSLA) Optimus. In this case, Willow refers to the famous Nelwyn magician Willow, who, through magic, achieves the unachievable. Well, this is what quantum computing is all about.
After the small trivia fact, let’s examine how this new development could benefit Google and how it compares to other ventures in the quantum industry.
How Does Willow Compare to Other Quantum Rivals?
Willow chip has superior error correction capabilities and computational power. While Rigetti (RGTI) Computing focuses on adaptable multi-chip systems, and IonQ (IONQ) puts its emphasis on trapped ion technology, Willow’s ability to perform complex computations in minutes sets a new benchmark in the sector.
Another big player in the industry, International Business Machines (IBM), has advanced in modular quantum systems and error reduction. Still, Willow’s breakthrough in reducing errors and enhancing qubit quality places Google ahead in the quantum race. Hartmut Neven, the founder of Google Quantum AI, stated that Willow can solve nearly impossible problems for traditional computers.
Financial Prospects
Willow’s advanced capabilities can drive significant revenue growth for Alphabet. Solving complex problems in different industries opens new commercial possibilities. For example, if Google were to Integrate Willow into Google Cloud’s offerings, it would attract more businesses who seeks high-performance computing solutions, boosting cloud service revenues.
Additionally, licensing Willow’s technology and securing research grants can generate additional income streams. Google will likely focus on offering Quantum Computing as a Service (QCaaS) through a cloud-native platform, with QCaaS expected to account for 40% of the quantum computing market by 2035.
Possible Next Steps for Google in the Quantum Industry
Following Willow’s successful launch, Google’s next steps will most likely involve refining its quantum technologies with the aim to integrate Willow into commercial and research projects, expanding Google Cloud’s quantum services, but also strengthening its partnerships with companies in the sector, like its collaboration with Rigetti in AI-powered quantum calibration.
Additionally, Google aims to leverage Willow’s capabilities to address real-world challenges, such as medicine or solving energy renewal challenges and advanced climate modeling.
Is GOOGL Stock Buy or Sell?
Looking at Wall Street, GOOGL stock is a Strong Buy, based on 27 buys and 6 hold ratings. The average price target for GOOGL is $209.21, implying a 7.07% potential upside.
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Is It Too Soon to Get Excited?
While unveiling Alphabet’s Willow chip is a significant milestone in quantum computing, it’s important to remember that Quantum computing is still in its early stages and faces many challenges before it can be commercially viable. However, the advancements made with Willow provide a strong foundation for future developments, particularly in fields like energy, medicine, and AI. What is certain is that the journey to quantum technology will be fascinating. If Alphabet continues on this promising path, it will be great news for its revenues and investors.
