It would be too ridiculous to go about seriously to prove, that wealth does not consist in money or in gold and silver, but in what money purchases.

 

_{--Adam Smith, Scottish economist and philosopher who was a pioneer in the thinking of political economy and key figure during the Scottish Enlightenment.}

In the past year, NVIDIA Corporation(NVDA.US) has been the star in the tech stock world, delivering significant returns and even surpassing Apple Inc.(AAPL.US) at times to become the world's most valuable company. 

However, with NVIDIA’s market cap exceeding US$3 trillion, maintaining that level of growth without a new catalyst will be increasingly challenging.

Historically, the semiconductor industry shows cyclical patterns where demand eventually slows after infrastructure peaks. While AI remains in the early stages and NVIDIA holds a strong supply chain position, its best investment days may be behind it.

As NVIDIA may reach the mental limit for some, those who seek saver opportunities are eager to identify the next “new frontier” in tech.

01

Speed and Encryption, How It Works?

A process of industrial mutation—if I may use that biological term:

 

Incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.

...

This process of Creative Destruction is the essential fact about capitalism.

 

_{--Joseph Alois Schumpeter, introducer of the economic concept "Creative Destruction", Austrian-trained economist, economic historian, author, regarded as one of the 20th century's greatest intellectuals.}

The question of where the next investment "new frontier" lies is essentially about where the next tech revolution will occur.

Much like AI and electric vehicles benefited NVIDIA Corporation(NVDA.US) and Tesla Motors, Inc.(TSLA.US), quantum computing could have a similar transformative effect. 

It tackles two significant challenges in technology: computational speed and encryption.

It is a new way of computing that uses the principles of quantum mechanics, which is the science of very small particles like atoms and electrons.

What makes it different? 

Let's talk science. 

In classical computers, the basic unit of information is a bit, which can be either a 0 or a 1. Quantum computers use quantum bits (aka qubits). 

Unlike bits, qubits can be both 0 and 1 at the same time. This ability is called superposition.

Qubits can also be connected through a phenomenon known as entanglement. 

When qubits are entangled, the state of one qubit instantly influences the state of another, even if they are far apart.

These properties allow quantum computers to perform many calculations simultaneously, making them extremely powerful for certain tasks. For instance, they can solve complex problems in seconds that would take classical computers thousands of years.

To perform calculations, quantum computers use quantum gates to change the state of qubits. The results are then measured, collapsing the qubits from their quantum state to a definite state of 0 or 1.

02

Destructing the Cliché

The enhancement in computational power, particularly with the advent of quantum computing, is profoundly disrupting the logic of social and economic operations.

 

Quantum computing has the potential to revolutionize fields such as cryptography, drug discovery, and optimization, solving problems far beyond the reach of today's computers. 

 

...

 

_{--ChatGPT, the "greatest" AI of our time, the trash generator, the devourer of electricity (just kidding)}

I believe the above arguments of how quantum computing is going to reshape the world are already familiar to many.

And they are undeniably correct. 

Quantum computing is wonderful, and so is building a mighty starship fleet equipped with plasma cannons for the Terra Federation and stopping Thanos before he can successfully collect 5 Infinity Stones and wipe out half of the universe. 

The huge increase in computing power will help us to build more accurate models so that many of the problems that have puzzled us without systematic grasp will be explained; Or it could help us crack the code, making cryptocurrencies vulnerable to it; It can even help us build another "real world" in the virtual space. That's true. 

But to realise all that stuff takes money... I mean, loads of it. 

If you do not have the money by yourself, how do you convince the bankers, venture capitalists, government budgeters, etc to lend you money (or to take part in your campaign if that's the case of equity financing) so that there are funds to support your vision of the future? 

Two factors are vital: 

• Your future is sustainable - the system can constantly generate income to pay for the costs and retain profits as rewards for your shareholders.
• Your future is accessible - you can eventually make it happen.

That's why the recent Alphabet Inc. Class A(GOOGL.US) Willow quantum chip got so much attention. 

Quantum computing research today is still facing difficulties such as building stable and error-free quantum computers is still a significant challenge. However, Google recently made significant strides in its Willow chip, which adds more qubits while reducing errors. Tech leaders like Elon Musk and Sam Altman have praised this breakthrough, highlighting quantum computing’s enormous potential. 

Willow outperformed traditional supercomputers, completing tasks in five minutes that would normally take 10²⁵ years.

Very impressive. 

At the same time, what's more important than the promised computational power is that we now know some folks really are making solid steps to make the future happen. 

03

So, How to Seize the Opportunities?

The best time to plant a tree was 20 years ago. The second best time is now.

 

_{- Chinese Proverb}

Quantum computing is emerging as the next significant technological wave. Those who seize this opportunity could enjoy substantial returns. 

But how to invest? 

Theoretically, investment strategies in quantum computing follow the evolution seen in the IT industry, combining hardware and software, with infrastructure advancing first, followed by applications. 

This pattern is evident from the Wintel combination in the PC era, Qualcomm + Apple + Android in the smartphone era, to NVIDIA + OpenAI in the AI era. Apple's unique position, independently controlling its chips and operating system, allows it to lead in these transitions.

In IT, the fusion of chips (central to information processing) and software systems (instruction sets executing operations) forms the technology's core framework. Effective IT investments hinge on understanding these dual components.

As quantum computing emerges, investors must identify the critical elements: 

The quantum chips and the evolving software systems. 

Therefore, locating these cores would be very important to capitalizing on the next wave of information technology advancements.

Tech giants such as Alphabet Inc. Class A(GOOGL.US), Microsoft Corporation(MSFT.US), Amazon.com, Inc.(AMZN.US), and International Business Machines Corporation(IBM.US) are all heavily investing in this field, signalling substantial future gains.

Investment in quantum computing mirrors past IT revolutions, combining hardware and software innovations. 

While these big tech companies may seem less agile due to their size, history proves otherwise. 

For example, Apple Inc.(AAPL.US)’s market cap grew from US$170 billion in 2007 to US$3.75 trillion today, driven by the iPhone revolution.

Additionally, smaller companies present higher volatility and potential returns. This year, Quantum Computing Inc.(QUBT.US) skyrocketed over 700%, D-Wave Quantum Inc. Common Shares(QBTS.US) up 428%, Rigetti Computing Inc Ordinary Shares(RGTI.US) 354%, and IonQ, Inc. Common Stock(IONQ.US) 176%. 

These companies may yield significant gains as quantum computing evolves.

To build such a balanced portfolio, investors might consider a combination of large-cap stocks like Alphabet Inc. Class A(GOOGL.US) and Microsoft Corporation(MSFT.US) with high-growth small-cap quantum computing firms. Large companies offer stability, while smaller firms provide significant upside potential.

Looking back into history, whether it's AI, electric vehicles, or previous waves like smartphones and personal computers, internal combustion engines, or steam engines... capturing transformations at the right time can lead to impressive gains.

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