IBM (NYSE: IBM) is older than computing itself, but it could take center stage of the quantum revolution to come
Investors looking for the next big investment thesis jumped on the quantum computing bandwagon earlier this month after Google (NASDAQ: GOOGL) introduced a chip called Willow it said took under five minutes to perform a computation that would take one of today’s fastest supercomputers more than the age of the entire universe. Despite excitement about the emerging space full of startups and boutique firms hoping to capitalize on the momentum, it’s one of the sector’s oldest giants that could end up leaping ahead to lead the pack.
IBM (NYSE: IBM), founded back in 1911 as a manufacturer of business equipment, put the first quantum computer on the cloud almost ten years ago, long before Wall Street was trying to figure out what an actual qubit is—the basic unit of quantum computing that can exist in more states than the binary 0 or 1 of classical bits. The company has a detailed roadmap for both quantum software and hardware that will see the delivery of a processor with 156 qubits—more than Willow—as soon as next year. It’s a 10-year plan that only the most elite and deep-pocketed companies could realistically undertake because of its breadth and ambition.
“IBM seems to have more meat on the bone in quantum than anyone [over the] long term, even Google,” Melius Research analyst Ben Reitzes said in a research note, noting he thinks the stock is a buy and worth $255 a share compared to its current price of $225. Developments in quantum computing could result in an “added bonus,” he said. While shares have risen 39% over the past year and outperformed the S&P 500, investors have largely bypassed the company this month as they rushed into other, more obvious quantum plays; no one wants to miss the next big thing after the relentless wave of excitement about AI pushed shares of chipmaker NVIDIA (NASDAQ: NVDA) to rise more than 2,000% over the past five years, but IBM has so far not grabbed much of the attention.
Indeed, shares of companies working in the quantum computing space have been hot over the past month in the wake of Google’s move to more broadly publicize information about its universe-beating chip: IonQ (NYSE: IONQ) rose 34.5%, D-Wave Quantum Systems (NYSE: QBTS) skyrocketed 512%, Rigetti Computing (NASDAQ: RGTI) increased 670%, and Quantum Computing Inc (NASDAQ: QUBT) surged 718%. IBM increased just 6.9% over the same period, although it’s admittedly harder to move a much larger, diversified company. Google saw its shares gain 7.7% in the initial hype wave surrounding Willow.
Quantum computing is still years away from going mainstream, but it’s well past its infancy stage even as most people are still grappling with what it is and how it can be deployed. IBM, for its part, thinks that the technology will initially accelerate scientific discovery and says algorithms reliant on linear algebra will need to employ quantum computers when classical computers can no longer keep up.
“We’re beginning to realize our ultimate vision of quantum-centric supercomputing,” the company wrote in a recent blog post. “We are committed to offering the tools that our users need to make real scientific discoveries in this new era, where quantum computers are finally demonstrating utility beyond brute force classical methods.”
For anyone who believes that quantum computing will be the next major technological leap—and potentially bigger than the current AI boom—they’d be amiss to forget about big old Big Blue. It’s proven that an old dog can learn new tricks, although it’s been a bumpy road over the past several decades that have seen the company transition from a PC manufacturer into a research powerhouse. Now, as the century-old company quietly positions itself as a frontrunner on the cutting edge of an emerging technology, its biggest adventure to come may still lie ahead.
