Over the past few years, much of the excitement around artificial intelligence (AI) has centered on how advanced chipsets known as graphics processing units (GPUs) are enabling developers to build and train large language models (LLMs). But looking ahead, AI use cases are expected to grow even more complex and reach broader end markets.
One of the more intriguing frontiers is quantum computing -- an emerging technology with the potential to transform mission-critical industries such as energy and financial services. Analysts from McKinsey & Company are projecting that quantum applications could unlock trillions in economic value in the long run.
Naturally, investors are curious: Which of today's AI titans are positioning themselves to lead the quantum era? In my eyes, two companies stick out as particularly well positioned to dominate the next wave of the AI narrative.
Nvidia: Building the hardware + software quantum stack
It wasn't long ago that Nvidia (NVDA 2.05%) was perceived as a niche hardware designer that primarily catered to online gamers. That narrow view dramatically underestimated the foresight of Nvidia's visionary CEO, Jensen Huang. Nearly two decades ago, Huang recognized that GPUs had the potential to impact industries far beyond gaming.
Today, these same chipsets serve as the foundation for deploying generative AI models like ChatGPT. But what truly sets Nvidia apart from the competition is its comprehensive ecosystem that extends beyond hardware expertise.
At the core is CUDA, Nvidia's software architecture that layers on top of its GPUs. This end-to-end integration has helped Nvidia build a powerful lock-in effect with developers -- essentially turning the company into a full-spectrum backbone for building AI systems.
While these dynamics have helped Nvidia form a technological moat, the company is quietly working to extend its dominance even further. CUDA is now becoming a bridge connecting conventional (classical) GPU programming with quantum workloads, helping position Nvidia at the center of emerging frontiers in the AI landscape.
The combination of hardware and software stack has helped Nvidia create a platform with durable competitive advantages. This flywheel effect not only reinforces its leadership in the AI industry but also positions the company to benefit from new tailwinds such as quantum computing.
Image source: Getty Images.
Alphabet: Purpose-built for the quantum era
When most investors think of Alphabet, their minds go straight to Google search or YouTube. Advertising still fuels the majority of Alphabet's cash flow, but beneath the surface, the company has quietly built one of the most advanced AI ecosystems on the market. And a particularly important -- albeit overlooked -- pillar of that strategy is quantum computing.
On the hardware side, Alphabet developed a quantum processor called Willow. In benchmark tests, Willow solved an equation in minutes that would take today's most powerful supercomputers an estimated 10 septillion years to complete.
On the research side, one of Alphabet's lesser-known subsidiaries is a research lab called DeepMind. The advantage of DeepMind is that Alphabet can quickly and constantly test and refine new chip architectures and AI applications -- making them readily available for the company's enterprise and consumer product suites.
Lastly, on the infrastructure side are Alphabet's tensor processing units (TPUs) and its open-source software framework, Cirq. This combination has the potential to usher in a new wave of AI workloads into Alphabet's budding cloud computing network, Google Cloud Platform (GCP). In the long run, this could prove to be an interesting differentiator for GCP over larger incumbents like Microsoft Azure or Amazon Web Services (AWS).
The key takeaway is that Alphabet's ambitions in quantum computing are far from a theoretical exercise. By deliberately building a vertically integrated stack across chips, research, software, and infrastructure, Alphabet underscores its AI-first identity well beyond search and advertising.
This breadth not only augments the core business, but more importantly, it provides some needed optionality -- ultimately ensuring that Alphabet remains nimble and adaptive in a fast-changing technology landscape.
