Alphabet Stock Jumps on Quantum Chip Breakthrough

Shares of Google’s parent Alphabet (GOOG) leapt 5.3% on 10 December after the company announced a breakthrough in the design of its quantum chips, the microchips needed to power quantum computing.

According to Google, the new chip named ‘Willow’ came up with the solution to a computing problem that traditional computers would theoretically have taken 10 septillion years (much longer than the history of the known universe).

The gains add to an already impressive year for the stock, which has gained over 25% year-to-date.

GOOG Stock Hits 4-Month High

After a 4-month consolidation, Alphabet stock has pushed above its October 2024 high to the highest in 4-months and could be set for a retest of its record high set in July of this year.

Even after the sharp pullback in July, GOOG shares have held above the upward-sloping 50-week moving average as well as an uptrend line that connects the last 3 swing lows, indicative of a long term uptrend in the stock.

Alphabet’s Quantum Computing Breakthrough

Google made the point in its press release that its new chip has no actual use cases but marks a breakthrough in quantum computing development. Alphabet CEO Sundar Pichai posted on X that the chip cracked “a 30-year challenge in the field.”

There was a positve reaction from investors to the news, who were possibly taking it as a sign that Google, although arguably behind OpenAI and Microsoft (MSFT) in artificial intelligence, is a leader in the field of quantum computing.

The Future of Quantum Computing

According to Hartmut Neven, Founder and Lead at Google Quantum AI, Google's aim —like other technology companies in the area—is to develop “a useful, large-scale quantum computer that could harness quantum mechanics.” Such a fast computer would likely significantly speed up scientific discovery, help solve societal problems, and have huge commercial benefits.

In quantum computing, errors loom large. Their root cause lies in qubits, which are quantum systems' core units, freely exchanging information with their environment. This disruptive trait makes retaining the data required for computations a formidable task. Add more qubits, and the problem worsens: errors multiply, pushing the system toward classical behaviour.

Google turned this narrative on its head. Using Willow, their quantum chip, they showed that scaling up qubits can do the opposite i.e. reduce errors and amplify the system's quantum nature. This achievement, termed "below threshold," is a landmark in quantum error correction, proving that error rates can shrink as qubit numbers grow. (Source: Google)

Conclusion: Where Next for Alphabet Stock?

Google's quantum computing breakthrough with the Willow chip seems to be helping restore investor confidence after concerns about the company's position in AI and potential threats to its core search business. While the achievement underscores Google's leadership in advanced technologies, practical applications of quantum computing are likely years away, meaning it is unlikely to have an immediate impact on Alphabet's business performance.