Recently, three well-known Wall Street names expanded their involvement in Alphabet. The group is not coming into focus because of AI, but because of new advances in quantum computing.
• Several prominent billionaires are increasing their Alphabet holdings
• Pure quantum computer stocks are left out, despite sharply increased prices
• Alphabet combines quantum research with a profitable core business and high financial strength
Why billionaires buy Alphabet and avoid pure quantum stocks
While quantum computer stocks such as IonQ, Rigetti Computing and D-Wave Quantum recorded triple-digit price gains last year, large institutional investors were noticeably cautious. A report from The Motley Fool shows that several of the best-known billionaire fund managers have instead added Alphabet to their portfolios or expanded existing positions.
Accordingly, Berkshire Hathaway, led by Warren Buffett, bought more than 17 million Alphabet shares in the third quarter. Stanley Druckenmiller also opened a new position, while Philippe Laffont significantly increased his holdings.
“The Motley Fool” points out that pure quantum computer companies have so far made losses, would burn through large amounts of money and would be demanding when it comes to valuation. This combination is considered a risk for long-term investors, especially since the commercialization of the technology is still at an early stage.
Willow as a technological signal from the Google laboratory
Alphabet’s quantum focus is closely linked to Google’s in-house Quantum AI team. According to Bloomberg, the company used its new Willow chip to run an algorithm that ran around 13,000 times faster than the most powerful classic supercomputer. The results were published in the journal Nature and are considered reproducible, an important step towards practical applications.
According to Reuters, Willow also addresses one of the central problems of quantum research, the error-proneness of so-called qubits. Google has developed an approach in which error rates decrease as the number of linked qubits increases. Even if the computational problems solved do not yet have any direct commercial use, the group sees them as a basis for applications in areas such as materials research, medicine and battery technology.
Alphabet’s foundation and financial strength as a key difference
The fact that Alphabet is more than just a bet on quantum computers for investors is due to its broad economic basis. “The Motley Fool” points out that Google has held a dominant market share in Internet searches for years and has additional sources of income with YouTube and Google Cloud. The cloud business in particular is increasingly benefiting from applications related to artificial intelligence and is experiencing accelerated growth, according to the report.
Added to this is the financial resources. Alphabet recently had three-digit billions in liquid assets and generated high operating cash flows within just a few quarters. These funds allow the group to finance long-term research projects such as quantum hardware without having to rely on capital markets in the short term. In contrast, many pure quantum providers lack a profitable core business that can bridge development phases.
Despite progress, there is still no breakthrough in sight
Despite technological advances, quantum computing remains a long-term topic for the future. According to CNBC, Alphabet itself emphasizes that it could take years or even decades before quantum computers can be used commercially on a large scale.
Although the results obtained with Willow mark an important step in research, they do not yet have any immediate practical use. Google points out that further development stages are necessary before quantum computers can be considered for commercial applications.
Independent scientists also call for classification. According to Bloomberg, the path from experimental successes to scalable and fault-tolerant systems remains long. This combination of progress and open technical challenges explains why quantum computing is considered a long-term prospect at Alphabet without already being a central driver of the company’s valuation.
Editorial team finanzen.net
By the way: Alphabet C (ex Google) and other US stocks can even be traded on finanzen.net ZERO until 11 p.m. (without order fees, plus spreads). Open a depot now for free and secure a new customer bonus!
Selected leverage products on Alphabet C (ex Google)
With knock-outs, speculative investors can participate disproportionately in price movements. Simply select the lever you want and we will show you suitable open-end products on Alphabet C (ex Google)
The leverage must be between 2 and 20
Advertising