Quantum Computing will Turbocharge Innovation and Productivity
March 26, 2024
Quantum represents the next frontier of computing. It is a field of computing that utilizes principles from quantum mechanics to perform multiple operations on data and it allows for the simultaneous exploration of multiple solutions. Unlike classical computers, quantum computers can solve certain complex problems much faster than classical computers. For example, Google has built a quantum computer that is about 158 million times faster than the world’s fastest supercomputer. Other quantum computing leaders include companies such as IBM, Amazon, and Microsoft. McKinsey has estimated that 5,000 quantum computers will be operational by 2030. While quantum computing is still in its initial stages of adoption, the long-term implications for scientific innovation and economic productivity are profound.
Quantum computing is opening new possibilities for scientific experimentation, as it is much faster at modeling complex scenarios. This speed boost could lead to significant breakthroughs in areas such as drug discovery, materials, and climate science. Other areas of interest include the optimization of supply chains, energy distribution and food production practices. According to McKinsey, automotive-chemicals-financial services-life sciences are four industries that are likely to see the earliest economic impact from quantum computing. Quantum computing can also serve as a better ‘engine’ for artificial intelligence. The opportunities at the convergence of artificial intelligence and quantum computing will likely be significant. As such, from an economic perspective, quantum computing will likely boost productivity, efficiency trends, and company competitiveness on a global scale.
In conclusion, as with artificial intelligence, the quantum era is bound to arrive. Its impact will be transformational for scientific innovation, economic productivity and the development of new products and services. From a long-term investment perspective, U.S. corporations could become even more competitive on a global scale. This scenario bodes well for long-term U.S. equity valuations and relative valuation premia vs. their global peers, especially as increased productivity acts as a supporting factor for U.S. corporate profit margins and earnings growth.
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