Quantum stocks explode after Uncle Sam wants in

The US government is bankrolling a type of computer even your nerdiest friend can’t build at home. The Trump administration said yesterday that it plans to invest $2 billion in several quantum computing companies in exchange for equity stakes.

It’s the most significant government boost yet for the experimental tech with the potential to speed up computing. Federal dollars will flow to nine companies, including the publicly traded IBM, D-Wave, Rigetti Computing, and Infleqtion. Their shares jumped as much as 31% on the news.

Schrödinger’s stake

Intended to aid America’s quantum leadership, the investment will come from the CHIPS and Science Act passed under the Biden administration:

• IBM will get $1 billion, which it will match to set up a dedicated quantum computer chip manufacturing company in Albany, NY. Quantum chipmaker GlobalFoundries will receive $375 million.
• D-Wave, Rigetti, and Infleqtion will each receive $100 million.

The Trump admin’s foray into quantum computing expands its unorthodox, federally funded portfolio of investments in industries that it deems critical for national security. Last year, it took a 10% stake in Intel, and it has since invested in several companies that mine critical minerals.

Why quantum?

All computers store information in something called a bit. Unlike classical computers, in which bits take the value of 1 or 0, quantum computers run on qubits—which can take the value of 1 and 0 simultaneously. In other words, this could make them vastly more powerful than ordinary computers, helping to turbocharge innovation in cybersecurity, engineering, drug development, and defense. McKinsey estimates that quantum computing could give a $2.7 trillion boost to the global economy by 2035.

But…critics say that the Trump administration might be taking an unjustifiably risky gamble with taxpayer cash by investing it into an unproven technology. Companies are still trying to fix quantum computers’ tendency to make errors, which currently makes them impractical for commercial use.

Payoff will likely take years…with Nvidia’s CEO, Jensen Huang, recently saying that practical applications of quantum computers are likely about 20 years away. Bill Gates, however, mused that they could come in as little as three years.—SK