IBM Flexes Its Quantum-Computing Muscle. Will That Translate to Its Stock? – Barron’s

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The 109-year-old original tech giant IBM, it turns out, is a huge quantum computing player. It has made one of the fastest quantum computers ever assembled. But as is often the case with the weird world of quantum, investors dont know what to do with that information.

IBM (ticker: IBM) published a paper on Thursday, in conjunction with Cornell University, demonstrating that the companys quantum computers have achieved quantum volume of 64. That matches the quantum volume achieved by Honeywell (HON) earlier this year.

Thats great, but what does that mean? Its fast.

Quantum volume measures performance. Its a useful measure, Paul Smith-Goodson said in an interview. It accounts for [factors such as] error correction and noise. Goodson worked at AT&T (T) Bell Labs in the 1980s, back when physicist Richard Feynman was talking about building quantum machines. He now consults for tech consulting firm Moor Insights & Strategy.

Goodson explained that the error rate when punching, say, 10 times 10 into a calculator is about one in a billion. The error rate for a quantum computer is about one in 200. That means quantum computers have to run calculations again and have more qubits to compensate for noise. All the adjustments, noise and error correction boil down to quantum volume.

It isnt directly comparable to classical computing, because the quantum world is weird, with quantum bits, or qubits, having multiple values at the same time. But the goal is to keep increasing volume and getting faster. Honeywells goal is to improve quantum volume by 10x a year, Goodson said. Go from 64 to 640 in 2021 and 6400 in 2022.

Is the magnitude in quantum computing like Moores law for quantum computers? Not really, Goodson said. We are in the noisy phase of quantum computing, still working on error correction.

Moores law says, roughly speaking, that the number of transistors on microchips doubles every two years. Transistors store information referred to as bits. Transistors are laid down on silicon chips. Qubits can also be stored on chips.

IBM uses extreme cold to put its equipment into a quantum state. What are, essentially, quantum microchips are cooled to minus 459 degrees Fahrenheit. That is just above absolute zero, as cold as anything can get.

Our first superconducting qubit was in 2007, IBM Quantum Vice President Bob Sutor said in an interview. He is quick to emphasize that IBM has been doing quantum for a long time. On the IBM cloud now [we have] 20 quantum computers available20 machines.

Wondering how many computations have been run on IBM quantum computers since they became available? Barrons guessed 40,000. Three hundred billion, Sutor said, adding that 1.1 billion circuits ran on Aug. 7. A circuit is, essentially, quantum jargon for a computation.

IBMs quantum business is real, and for now it is essentially free. Companies, researchers or individuals can access the machines via the cloud to program and preform calculations. Down the road, quantum as a service could be come big business for IBM, Honeywell and other players. For now, IBM is creating machines and enabling use cases, Sutor explained.

IBM and Honeywell are quantum players. Google parent Alphabet (GOOGL), Amazon.com (AMZN) and Intel (INTC) are other quantum players Goodson is familiar with. Apple isnt really into this, as far as he knows.

Investors dont trade any of those stocks based on quantum yet. IBM stock, for instance, is down about 8% year to date. Honeywell shares are down about 11%. Both returns trail behind comparable gains of the S&P 500 and Dow Jones Industrial Average. Quantum gains arent enough to move the stocks yet.

In the case of Honeywella large aerospace supplierpandemic-induced air-travel declines have hurt its shares. Other tech names have performed better than IBM shares. The Nasdaq Composite, for instance, is up almost 25% and Apple (AAPL) stock touched $2 trillion in market value Wednesday.

IBM investors would surely like the company to get more credit as a tech giant with cloud computing as well as a burgeoning quantum computing business.

Thats down the road, according to both Sutor and Goodson. What will be the killer app that brings quantum into the mainstream and how will quantum change the world? Both men answered: I have no idea.

They are both experts in the field and know that new technology tends to change things in unforeseeable ways.

Write to Al Root at allen.root@dowjones.com

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IBM Flexes Its Quantum-Computing Muscle. Will That Translate to Its Stock? - Barron's