Why Alphabet Stock Rises 12% in January

stock alphabet (GOOG 2.50%) (google 2.65%) It was one of the winners last month after the tech giant unveiled groundbreaking technology with its new quantum chip, Willow.

The news sparked a surge in quantum computing stocks, with Alphabet jumping in the two days following the announcement. Because this is the latest evidence that the company is at the cutting edge of the AI ​​race.

The stock ended the month up 12%, according to data from S&P Global Market Intelligence. As you can see in the chart below, there has been a significant uptick since the announcement of quantum computing on December 9th.

GOOGL data from YCharts

Google Ring in the Quantum Computing Era

Alphabet shares rose 5.6% on December 10th and rose another 5.5% on December 11th following the news about Willow.

On December 9, Alphabet stated in a blog post that Willow had achieved cutting-edge performance across multiple metrics. One of the most notable achievements is that Alphabet has been able to reduce errors exponentially as it scales to use more qubits. The company said this has been a challenge for quantum error correction for nearly 30 years.

Another significant achievement was Willow’s ability to complete a benchmark calculation in less than five minutes that would take one of today’s best supercomputers 10 trillion (or 10^25) years, demonstrating the enormous leap forward quantum computing can achieve.

It’s unclear what Willow’s results will be, but Google’s blog notes that it’s “a strong signal that useful, very large quantum computers can indeed be built,” which could ultimately enable large-scale algorithms to be implemented at very high speeds.

Alphabet’s performance also sparked a boom in quantum computing stocks. dispose computing, quantum computingand D-Wave Quantum They have all more than doubled in the past month.

Image source: Getty Images.

What’s next for the alphabet

In the technological arms race, perception is as important as reality. Shortly after the launch of ChatGPT, Alphabet was perceived as a loser after Bard, the first generative AI chatbot it created, made mistakes in its first presentation.

However, Alphabet overcame these challenges and replaced Bard with Gemini and added an AI assistant to Google Search to keep users in the ecosystem. To date, the business has continued to perform well, with sales and profits steadily growing. Alphabet is also cheaper than most of its “Magnificent Seven” peers, making it a better value.

It may still be years before quantum computing changes Alphabet’s direction, but last month’s announcement should reassure investors that the company remains on the cutting edge of technology that could be as important to the stock as delivering meaningful business benefits. no see.