The secondary market is cold, but the primary market has gained momentum

 

Once commercialized, quantum computing will lead humanity into a whole new realm.

 

Today, the processing power of artificial intelligence (AI), ChatGPT and other large language models is limited by the limited surface area of the chip: beyond a certain number of GPUs, the batch processing capacity of each GPU becomes smaller - further increasing the number will instead increase the cost. As a result, Moore's Law, the golden rule of the semiconductor industry, has once again been called into question: Nvidia CEO Jen-Hsun Huang even said in 2022 that "Moore's Law is dead."

 

 

In this way, GPU processing power (arithmetic power) improvement will be the key to further development, and the special feature of quantum computing is that its computing power grows exponentially with the number of quantum bits it can support; therefore, quantum computing will become one of the important frontier technologies that are expected to continue Moore's Law, which is close to the physical limit, to continue its development.

 

Today, the digital economy is expanding and the demand for computing power is increasing; quantum computers are improving and becoming cheaper to develop, and the advent of technologies such as cloud computing has made quantum technology more accessible to researchers and software developers. There is no doubt that quantum computing will become a key technology in the next decade.

 

Globally, quantum companies such as Rigetti, IonQ, D-Wave, and Guodun Quantum have been listed; Google, IBM, Microsoft, Intel, and Honeywell, which announced in 2019 to reach "quantum hegemony", are leading in quantum computing; Chinese technology companies such as Alibaba, Baidu, and Huawei are also actively The deployment.

 

At scale, quantum computing will disrupt every industry in the world, from finance to biotechnology, cybersecurity and everything in between.

 

Quantum computing is expected to be the big winner in the next decade.

 

At this juncture, at this moment, long-term investors can put money into such growth stocks when they become too expensive in order to realize future excess returns.

 

Wall Street: Quantum Stocks, with Upside

 

Since the first pure quantum company, IonQ, went public on the NYSE SPAC in 2021, more and more quantum companies have come to the secondary market.

 

In February 2022, D-Wave entered into a definitive transaction agreement with publicly traded special purpose acquisition company DPCM Capital, Inc. (NYSE: XPOA) ("DPCM Capital") and traded on the New York Stock Exchange (NYSE). Once listed, it successfully raised $340 million at a valuation of approximately $1.6 billion at the time and ultimately under-raised in real terms. in March, Rigetti Computing entered into a definitive transaction agreement with Supernova Partners Acquisition Company II, Ltd. ("Supernova") (NYSE: SNII) completed a business combination, and that SPAC financing raised a total of approximately $260 million.

 

As can be seen, quantum computing companies in the secondary market primarily go public and receive financing in the form of SPACs. Raising capital by SPAC not only saves time and is relatively much less expensive, but also fully meets the minimum public listing standard requirements set by the SEC; and compared to the traditional shell listing, the shell resources of SPAC are clean and free of historical liabilities and related legal and other issues.

 

Currently, the overall trend of quantum computing-related startups in the U.S. is very sluggish and involves some negative news (such as poor cash flow), and some are even at risk of delisting. Turning disruptive technologies into commercial success is extremely difficult and rare, requiring both the translation of scientific advances into practical products that create demand from paying customers and the raising of sufficient capital from patient investors.

 

One such company, IonQ (NYSE: IONQ), has gained momentum in the past few years. The company's quantum solution, Ion Q Aria, was integrated into Microsoft's Azure hybrid cloud platform in January, thus marking a major step forward in the commercialization of quantum computing. US Wall Street is also mostly bullish on IonQ's prospects: it currently has an analyst price target of $9.50 and still has a potential upside of 105.6% as of March 2, 2023.

 

IONQ stock price from September 2022 to date

 

Arqit Quantum (NASDAQ: ARQQ) is another quantum computing growth stock to watch. The company is developing a quantum computing network that provides secure and encrypted communications, as well as data storage and computing power for a variety of applications; the company also helps protect the private cloud infrastructure of various blue-chip customers, such as the U.K. government. Analysts expect its profits to increase significantly in the coming year: to 27 cents per share.

 

ARQQ share price from September 2022 to date

 

Since its IPO in 2021, Arqit shares tripled in a few months; then all but fell when SPAC collapsed. Despite technically being the only profitable quantum business under generally accepted accounting principles (GAAP), Arqit still burned through $29.3 million in negative free cash flow last year.2023 In mid-February, Arqit announced that it had agreed to sell 10 million new shares to institutional investors at $2 per share, with the right to purchase up to 7.5 million more shares at the same strike price (warrants) - which will yield nearly $35 million in cash. If Arqit is able to accomplish this superhuman feat, the stock will pay off today.

 

2023 kicks off with a massive infusion of capital into the quantum space

 

Quantum computing is attracting a lot of investor interest during a downturn in venture capital investment.

 

In February 2023, Q-CTRL, a quantum computing startup based in Sydney, Australia, announced a $27.4 million Series B supplemental funding round; to date, Q-CTRL has closed a total of $52.4 million in Series B funding.

 

Israeli startup Quantum Machines also announced an additional $20 million in Series B funding on top of the $50 million it raised last September. Similarly, Paris-based quantum computing startup PASQAL announced similar news: the company raised 100 million euros in a Series B round of funding; and UK-based Oxford Ionics raised 30 million pounds in a Series A round.

 

Funding for quantum computing startups comes not only from venture capital firms, but also from governments around the world. on January 23, Canadian Prime Minister Justin Trudeau, announced a new federal investment of $40 million "to enable Toronto-based Canadian quantum computing company Xanadu Quantum Technologies Inc. to build and commercialize the world's first photon-based, fault-tolerant quantum computer."

 

Quantum research and consulting firm GQI statistics say that state-funded research and development programs worldwide total more than $55 billion.

 

Funding for quantum technology is global, long-term, continuous and diverse. In fact, it is one of the most coordinated and well-resourced national programs available. While North America holds a significant advantage in terms of national programs, China must be considered a leader in terms of funding. Regions such as Australia, Japan, India and Israel have exceptionally strong programs. And continental Europe, led by the United Kingdom, France and Germany, can rightfully claim the top spot because of the amount of resources invested and the strength of basic research and science.

 

A national program in the United States recently received $9.1 million from the U.S. Department of Energy to fund 13 projects in quantum information science (QIS) related to nuclear physics. The Washington Technology Industries Association (WTIA) also says that the U.S. has been actively funding QIS R&D for the past 15 years, adding clusters of quantum-related activities in the Pacific Northwest (including startups, local universities, Amazon and Microsoft) to a growing list of U.S. regions: Virginia/Maryland/DC area, Chicago, Colorado, New York State, to develop A "Silicon Valley" of quantum computing.

 

Australia is also developing a quantum computing cluster, with government agencies, universities, established companies and startups all contributing to the investment and promotion of local expertise. The Australian government is providing $4 million for up to 20 PhDs in quantum research. There are more than 17 quantum-related companies in Australia that have received a total of more than $400 million in funding and investment in developing hardware, software and consulting services.

 

Currently, quantum computing is in the noise-laden quantum computing phase, the early stages of the NISQ era. The long wait for technology breakthroughs and the scarcity and stinginess of paying users are a constant threat to the quantum computing industry as a whole. 2022 is clearly a real threat to everyone, albeit interspersed with multiple factors such as the new crown epidemic, global economic slowdown and technological confrontation, but the threat is just beginning.

 

How to translate advanced technologies to create effective demand and to obtain sustained and patient funding is the next primary concern that all quantum technology practitioners must focus on.

 

Note: This article does not constitute investment advice.

 

Reference links：

[1]https://investorplace.com/2023/03/the-top-3-growth-stocks-in-quantum-computing/

[2]https://www.fool.com/investing/stock-market/market-sectors/information-technology/ai-stocks/quantum-computing-stocks/

[3]https://www.fool.com/investing/2023/02/17/why-arqit-quantum-stock-collapsed-today/

[4]https://www.forbes.com/sites/gilpress/2023/01/31/new-funding-for-quantum-computing-accelerates-worldwide/?sh=1a3994d2b35b