EMJ Capital founder and President Eric Jackson discussed the potential for Alphabet (GOOG)’s new quantum computing chip, Willow, being a potential Bitcoin and Nvidia killer on Making Money. Here is what he thinks about the new chip:
As excited as people may have gotten about artificial intelligence in the past year, quantum is just the next level of that interest, Jackson claims. Quantum computing is the next leap in technological advancements, offering more powerful computations, more powerful computers, faster solutions than one can imagine, and problem-solving capabilities beyond the reach of traditional computers.
High angle view of a semiconductor chip against an array of electronics components.
When asked about the potential threat quantum computing poses to Bitcoin, even though not immediate, Jackson affirms that the threat lies in the encryption. He noted how today’s encryption methods, such as RSA, rely on complex mathematical formulas that are secure against conventional computers. Take Bitcoin, nobody thought they could crack into these things which is what powered its rise to $100,000.
However, quantum holds the theoretical potential to crack into these things. Jackson warns that crypto wallets could be hacked in the future with quantum technology. However, the risk isn’t merely limited to crypto wallets and the billions of bitcoins around the world. Companies, industries, and banks should all be worried about the sensitive data that could be at stake.
Couple this with the fact that Google just dropped a chip out of the blue, it merely signifies how quickly quantum technology is accelerating, demanding immediate attention to the security and investment in the quantum industry. Jackson highlighted two names that he likes in the Quantum space: Rigetti (RGTI) and D-Wave (QBTS). Both of these names have witnessed great runs, surging an estimated 300% in the last month.
Jackson claims that they are both trying to build chips to be as good as or better than Google, and there’s a lot more investment pouring into the space so investors should pay attention to those names. Jackson also highlighted a smaller company called BTQ in the business of what he considers the “post-quantum Crowdstrike”, with their job being to defend all these crypto wallets and their sensitive data.
Despite skepticism, Jackson believes the market is recognizing the immense potential of quantum computing. While it may take time to believe much like the rapid rise of AI, quantum technology is here to stay. Those who invest early could position themselves to benefit from the huge bull run ahead.
Alphabet’s (GOOGL) quantum chip is still years away from becoming a threat to bitcoin, but quantum computing chips are also a threat to traditional chip companies such as NVIDIA (NVDA) because they are exponentially faster than traditional chips. Alphabet’s engineers didn’t specifically mention a target date when quantum computers can be used for “useful” tasks, but they hinted that it is less than 10 years. NVDA’s forward PE multiple is around 35 and NVDA may not have enough time to generate the profits implied by its forward multiple before its AI chips might be rendered obsolete by the new quantum chips.
While we acknowledge the potential of NVDA and GOOG, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GOOG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.