Alphabet soars after breakthrough with Willow Quantum chip

(Bloomberg) — Alphabet Inc. shares rose the most since October as analysts welcomed Google parent company’s announcement Monday of a major development in quantum computing through the use of its Willow quantum chip.

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The shares even rose by 6.3% and were at their highest level since July. Alphabet has underperformed most of the Magnificent 7, but Tuesday’s rise added to a catch-up rally that sent shares up nearly 25% from their September lows.

The company’s quantum computer takes just five minutes to solve a problem that would take supercomputers about 10 septillion years to solve, Alphabet said Monday, but didn’t reveal any actual uses for all that theoretical power.

However, that didn’t stop analysts from being optimistic about the development, with many highlighting Willow as a potential long-term catalyst.

Although Quantum is still years away from widespread commercial adoption, the breakthrough “strengthens Google’s technology leadership,” wrote Colin Sebastian, an analyst at Baird who has an outperform rating on the stock. “Willow marks an important step toward the eventual commercialization of quantum computing – something that could have significant implications for many industries as well as data and national security.”

Bloomberg Intelligence wrote that quantum advances are “likely to help with both AI training and inference” at Alphabet, while the company’s chip advantage is “likely to increase relative to other major technology companies.”

Other quant stocks also moved in the wake of Alphabet’s announcement. Rigetti Computing Inc. rose as much as 29% on Tuesday, while D-Wave Quantum Inc. rose 16% before erasing much of that gain; it recently traded 6.7% higher. IonQ Inc. rose 5.4%.

The group has been on a roll lately. IonQ is up more than 400% from its September low, as is D-Wave, while Rigetti is up more than 600% from its own September low.

Options traders also took notice of Alphabet stock’s rally. More than 400,000 call options on the stock changed hands as of 10:23 a.m. in New York, nearly five times more than put contracts, data compiled by Bloomberg show. Less than an hour into trading, the volume of options betting on further gains in the stock was 2.4 times higher than the daily average over the last 20 days.

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