Season 7, Post 22: The third pillar
2025 is, in case you were not aware, the UN International Year of Quantum Science and Technology. And rightly so. If artificial intelligence was not a big enough technological tsunami, then prepare yourself for quantum computing. The potential of quantum is far from novel. We have written on the topic since 2017 and more recently in 2023 but already this year we have seen several major breakthroughs. The transformation may arrive sooner than expected.
Think of quantum as a replacement neither for conventional computing nor generative AI. Rather, it should be seen as a complement, or as the “third pillar” of modern, high-performance computing. This metaphor was used by an industry expert (formerly employed at Google and Amazon) with whom we recently spoke on the topic. He highlighted that while recent advances in AI had been revolutionary, current digital computing is still very bad at solving many problems. AI does not “understand” complex natural systems such as biology or chemistry, where the range of possible outcomes to any problem is an order of magnitude that is hard for humans to comprehend (ask if you want to know the details).
The good news is that there have been several recent breakthroughs in the quantum space that have helped to turbo-charge progress. Microsoft announced in February its Majorana 1 quantum chip. A month later, start-up D-Wave claimed it had achieved ‘quantum supremacy’, or the state where a quantum computer surpasses the capabilities of the most powerful classic digital computer. In May, the latest news came from Cisco and their unveiling of an entanglement chip, which it says could accelerate practical quantum computing by a decade.
When technological progress translates to commercial value, however, remains more open to debate. Our expert contact highlighted a range of quantum potential use cases, all centred around optimisation. These could include container storage planning for shipping companies, simulations for materials characteristics, predicting the toxicity of molecular reactions and scheduling charge for electric vehicles. If quantum follows the AI playbook, then the infrastructure providers look best placed to benefit initially. D-Wave’s share price has gained more than 90% year-to-date, even if Bloomberg consensus estimates show it will be loss-making for the foreseeable future.
17 June 2025
The above does not constitute investment advice and is the sole opinion of the author at the time of publication. Past performance is no guide to future performance and the value of investments and income from them can fall as well as rise.
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Alex Gunz, Fund Manager
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