Quantum computing has captured investor imagination with its potential to solve problems that would take classical computers millennia to crack--from designing new materials to breaking encryption codes. But the gap between laboratory breakthroughs and commercial applications is vast.
Pure-play quantum stocks like IonQ and D-Wave Quantum have soared on expectations of near-term commercialization, but there's plenty of reason to believe investors are getting ahead of themselves.
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Alphabet's long-term edge in quantum computing
That could be a big problem for quantum start-ups; it won't be for Alphabet (GOOG 1.64%) (GOOGL 1.71%). The company took the long view on quantum computing when others were still skeptical. Beginning in the early 2010s, the company committed substantial resources to building a world-class quantum research operation, investing not just money but years of development time. That, in my opinion, is the sort of approach most likely to win out here.
Unlike its smaller competitors, Alphabet has the resources to continue to pursue research and development of useful quantum technology, no matter how long it takes. If it doesn't pay off in the coming years, it won't have much of an impact on Alphabet -- not so for the likes of D-Wave and Rigetti. For these companies, the risk is existential. If and when quantum computers truly take off, Alphabet will be at the forefront, whether through its own efforts or through strategic acquisitions.
