Quantum Computing Is Revolutio – GuruFocus.com


Quantum Computing Inc. (QUBT, Financial) stands out as a potentially excellent investment in the disruptive but emerging quantum computing industry.

Solve complex problems

According to TechTarget, quantum computing theory explains the nature and behavior of energy and matter at the atomic and subatomic levels. Current computing is based on algebraic principles. Quantum supercomputers compute qubits, leading to massive increases in memory and speed. They solve complex problems that classical computers struggle to solve by running complex simulations of complicated systems.

In its early stages, FutureLearn.com notes that quantum computers are difficult and expensive to build. The computers are error-prone and there are hardware development and stability issues. They require massive investments in cooling costs and basic infrastructure. In addition, specialists are required to design, build and operate these computers.

Of course, these companies need a lot of capital to keep going. In recent years, the rate of investment in larger companies has increased.

An example is Microsoft Corp. (MSFT, Financial), whose Azure Quantum service builds and runs quantum algorithms for multiple platforms simultaneously. Alphabet Inc. (WELL, Financially)(Google, Financial) Google Quantum AI develops software and hardware. Google researchers claimed they had achieved quantum supremacy three years ago when their Sycamore quantum supercomputer worked in 200 seconds; The exercise was an insane calculation that they said would cripple a supercomputer for 10,000 years. Furthermore, International Business Machines Corp. (IBM, Financial) released its Q System One two years ago, while Nvidia Corp. (NVDA, Financial) is collaborating with other companies on the next generation of computers. In August 2020, Amazon.com Inc. (AMZN, Financial) launched Amazon Braket, a cloud-based quantum computing service. Until 2023 Fujitsu Ltd. (TSE:6702, Financial) will be the first company to offer quantum computing-derived research.

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According to PC Magazine’s Matthew Humphries, “There is hope that quantum computing can have a major positive impact in a range of fields, including chemicals, pharmaceuticals, automobiles and finance.”

New kid in the game

Based in Leesburg, Virginia, Quantum Computing was founded in 2001 and is a new player in the space, having originally been formed to sell inkjet cartridges online. It then became a liquor store in 2007, according to The Quantum Insider.

In 2018, the company announced its decision to shift its business focus to quantum computing and announced its new name.

Quantum computing is now in the early stages of commercialization of software tools and applications that leverage novel enterprise quantum computing capabilities, rather than focusing on hardware. The Qatalyst program is a quantum accelerator that allows developers to build and run quantum-ready applications on conventional computers in preparation for execution on quantum computers.

The company completed its first acquisition in June. The addition of QPhoton expands its capacity to develop photonics-based quantum systems. Findings from QPhoton complement Quantum’s Dirac entropy quantum computer. The main benefit is that Dirac is deployed at room temperature as a rack-mountable server with no dedicated infrastructure, eliminating the need for an underground cooling environment.

In an August shareholder letter, Quantum Computing CEO Robert Liscouski said he believes the company offers real-world solutions that put it three to five years ahead of the competition.

“Quantum information processing to solve real-world problems is available now, and this is just the beginning,” he said. “World-class talent will be at the center of making QCI a real force in the quantum information industry.”

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starting numbers

At the end of 2021, Quantum Computing reported total assets of $17.3 million. Six months later, the company reported total assets of $91.9 million, but that included fixed assets less depreciation, deposits, intangible assets of $25 million and goodwill of nearly $60 million.

The company’s market capitalization is $84.76 million.

Total revenue for the six months ended June 30 was $96,000. Total operating expenses were $11.5 million, leaving a cumulative net loss of $12.23 million. The loss per share was 42 cents. The company has no debt.

Based on a GF score of 40 out of 100, the company currently has low performance potential.

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It received a high financial strength rating of 8 out of 10 and a moderate momentum rating of 6 out of 10. The financial strength rating is arguably somewhat bullish given that the company has less than a year of liquidity. It could dilute shareholders by issuing more shares to raise money.

Quantum’s stock is more volatile than the market as its 52-week high was near the IPO, hitting $8.90. The stock fell to a low of $1.42 in May in anticipation of the takeover.

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On September 20, Quantum Computing announced the launch of the subscription service Dirac1, ushering in the monetization of its research and development. The commercial service provides web-based access to programs capable of problem solving for up to 5,000 variables on an hourly basis per month for a fully dedicated system.

In October 2021, institutional ownership emerged. Quantum Computing currently has 33.9 million shares outstanding. About 5.4% or 1.83 million shares are owned by institutions. Almost 14% is owned by company insiders and 74.33%, or about 25 million shares, are outstanding.

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positive calculation

The significant proportion of company ownership is a positive sign. The increase in institutional ownership suggests that confidence in the small business is growing. At the end of June, Quantum Computing was included in the Russell Microcap Index. Liscouski described the event as an important milestone. The stock price is down more than 60% over the past year, but short rates are less than 2%.

The quantum computing industry is expected to grow at a compound annual growth rate of 35.2% through 2028. This will no doubt spur revenue growth in quantum computing. The company could also potentially benefit from government cash injections.

The US Department of Energy has allocated US$166 million over five years to encourage quantum computing capacity building and US$500 million over the same period to build nationwide large-scale quantum computing network infrastructure under the CHIPS and Science Act . America’s National Quantum Initiative has committed more than $1 billion in other federal funds.

I predict that companies will increasingly turn to quantum computing as the company offers software that runs on currently available hardware. The return on equity is set to double over the next 12 months, and with proper marketing, the stock has the potential to surpass $3.25 per share.

Conclusion

Quantum computing might seem like a niche industry in the early days of R&D, but it’s attracting the attention of large corporations, investors, and government officials. History suggests that financially strong companies look to buy early assets rather than fully commit to building them. With big money pouring into the world-changing industry, quantum computing’s position in the market makes it a potentially excellent long-term investment.



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