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Microsoft says its figured out how to improve error rates in quantum computing, bringing quantum computing closer to a commercial state.

The company worked in collaboration with quantum computing hardware maker Quantinuum to improve the performance of the qubit the very basic unit of quantum computing. Qubits work by holding two different phases at once (instead of just a one and a zero, its both), but they arent very stable, making it easy for them to lose data. Researchers can now create several logical qubits, or qubits that are more stable while holding these different states.

Krysta Svore, vice president of advanced quantum development at Microsoft, told The Verge in an interview that because qubits are prone to errors, researchers needed to find a way to stabilize them.

We need reliable quantum computing, and not just in theory; we need to demonstrate that it can work in practice, Svore says. I like to think of it as putting noise-cancelling headphones on the qubits.

She says that these more reliable qubits help quantum computing graduate from level one, the more foundational level with qubits prone to mistakes and are usually referred to as noisy, to the next level, where scientists can run more calculations correctly and scale up the technology for more commercial use.

Other quantum computing experts welcomed Microsoft and Quantinuums advancement. Henry Yuen, associate professor of computer science at Columbia and a theoretical computer scientist, tells the Verge via email this may just be the beginning of more discoveries that make quantum computing easier.

Were far from the final destination, but the signposts are getting more frequent and are indicating that some major milestones are coming up soon, Yuen says. Im sure there will be bigger and better demonstrations of quantum fault tolerance coming soon.

Microsoft brought its qubit-virtualization system, which Svore says abstracts groups of physical qubits together, to Quantiuums quantum computer to create virtual logical qubits.

With it, users could create qubits with a longer fault tolerance, or time without encountering an error. The team created four reliable logical qubits from only 30 physical qubits. Previously, the scientific consensus was that hundreds of physical qubits were needed to make a couple of logical qubits that didnt fail, and they would have taken decades to create.

The teams ran 14,000 calculations without losing the quantum state and found they improved the error rate by a factor of 800 over physical qubits. Svore says the system could detect and fix errors without destroying the logical qubit and keeping the string of calculations going.

Microsoft is now figuring out how to bring this capability to Azure Quantum Elements, its platform for scientists to use AI, high-performance computing, and quantum computing to run scientific experiments.

Yuen says that while he thinks the term quantum virtualization may be Microsofts branding for error-correcting code, its findings could be scalable for other quantum computing companies to try on their own.

Quantum computing has always seemed like far into the future innovation, despite the idea and experimentation being around for decades. Companies such as IBM, Microsoft, and Google have been trying to make quantum computing reliable, safe, cost-effective, and, more importantly, useful for years.

Quantinuum chief product officer Ilyas Khan and senior director of offering management Jenni Strabley said in a blog post that they plan to continue improving the system to create more reliable logical qubits.

In the short term with a hybrid supercomputer powered by a hundred reliable logical qubits, we believe that organizations will be able to start to see scientific advantages and will be able to accelerate valuable progress toward some of the most important problems that mankind faces such as modeling the materials used in batteries and hydrogen fuel cells or accelerating the development of meaning-aware AI language models, Quantinuum said in its post.

Now, with Microsoft and Quantiuums work, its up to others to see if they can replicate the same thing.

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Microsoft says it's cracked the code on an important quantum computing problem - The Verge

Republican lawmakers will introduce a new bill Wednesday to accelerate the Defense Departments use of quantum information science, from sensing and navigation to more ambitious goals of quantum computing for advanced artificial intelligence applications.

Rep. Elise Stefanik, R-N.Y., and Sen. Marsha Blackburn, R-Tenn., will introduce the Defense Quantum Acceleration Act. The legislation would direct the Defense Department to establish a new quantum advisor role and stand up a center of excellence to explore and identify [quantum information science] technologies that have demonstrated value in advancing the priorities and missions of the Department, according to the text of the bill, viewed exclusively by Defense One.

Quantum information science, which takes advantage of the unique properties of quantum mechanics, has many potential defense applications. Information thats encrypted on the quantum level cant be secretly intercepted because attempting to measure a quantum property changes it. Quantum sensors can relay information about location, making them a more secure means of navigation than GPS, which can be spoofed. Quantum computers, today in their infancy, could eventually process information exponentially more effectively than conventional computers. The National Academies of Sciences has said quantum computers are the only known model for computing that could offer exponential speedup over todays computers.

But China has outpaced the Defense Department in terms of investment in quantum technology, dedicating $15 billion over the next five yearsor $3 billion a yearas opposed to the $700 million yearly Defense Department investment.

The new bill doesnt push the Defense Department to match Chinas numbers, as private companies like IBM, Google, and Lockheed Martin are also heavily spending research and development dollars on next-generation quantum computing. But it does raise the profile of quantum technology within the Defense Department and, theoretically, would allow the Pentagon to start buying more quantum technologies faster, enabling quicker innovation from private companies.

Quantums impact on our national security will be considerable, and we must take immediate steps to ensure the United States is the first nation to reach quantum advantage. This bill will ensure the Department of Defense, led by the incredible work at [The U.S. Air Force Rome Laboratory in New York] is able to outpace our adversaries and rapidly develop and transition quantum technologies to our service members, Stefanik said in a statement.

The Defense Department already has a director of quantum science in the office of the undersecretary for research and engineering. Under the bill, the newly-established quantum advisor would have a much-expanded role, coordinating with combatant commands on where they might need or use quantum science, coordinating with allies like Australia to share knowledge and best practices, and specifically looking at the challenges the Defense Department faces to determine if quantum information science might help.

The bill would also direct the stand-up of a center to coordinate with businesses and academia and develop prototypes of more near-term quantum technologies for sensing and navigation, in addition to accelerating quantum computing research.

Chris Padilla, vice president of government and regulatory affairs at IBM, applauded the introduction of the act, which he said, helps ensure the Department of Defense embraces this revolutionary technology. For national defense and economic security reasons, the United States must maintain a leadership position in quantum computing, and this legislation supports that effort. IBM encourages Congress to pass it and the administration to begin deploying quantum-centric supercomputing.

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New bill would greatly expand Defense Department quantum efforts - Defense One

The quantum computing industry is still in its relatively early stages, which means many companies in this space could be trading at attractive valuations compared to their long-term growth potential. This provides opportunities for the most undervalued quantum computing stocks to buy in April.

One reason for undervaluation is the high degree of uncertainty surrounding the timeline for widespread commercialization and adoption of quantum computing. Some big brands, such as Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM), might not be considered undervalued given that they are blue-chips in their own right. Investors should explore more speculative names for the best bargains.

Additionally, many prominent quantum computing players are still pre-revenue or in the early stages of generating meaningful sales. Traditional valuation metrics like price-to-earnings may not yet be applicable, leaving investors to rely more on future growth projections, which can be difficult to assess accurately.

However, the most undervalued quantum computing stocks to buy in April could be long term winners. Here are three companies to consider.

IonQ (NYSE:IONQ) focuses exclusively on quantum computing, offering quantum computing systems across major public cloud services. With a market cap of around 1.9 billion, its also small enough to ride the ups and downs of the market while still being robust enough to withstand volatility. It also means there could be plenty of upside, which may make it undervalued.

For 2024, IONQ has set its revenue expectations between $37 million and $41 million, with bookings projected to range from $70 million to $90 million. However, the company anticipates an adjusted EBITDA loss of approximately $110.5 million. Its EBITDA loss helps make it undervalued. In the long term, its prospects are attractive.

In terms of valuation, it trades at a forward price-to-sales multiple of 47 times sales. Still, this is relatively low compared to analysts long-term revenue growth rate, which is another hint of trading below its intrinsic value.

Rigetti Computing (NASDAQ:RGTI) specializes in developing quantum integrated circuits and a cloud platform for quantum algorithms.

RGTI could be one of the most undervalued quantum computing stocks on this list, as its market cap is just 219 million at the time of writing, so theres substantial room for it to head higher. Its forward P/E ratio of 13 times sales underlines this undervalued nature.

Financially, theres also some evidence that RGTI could be undervalued, and the companys best is yet to come.

In the fourth quarter of 2023, RGTI reported revenues of $3.4 million, a decrease from $6.1 million in 2022. The gross margin stood at 75%, slightly declining from 87% in the fourth quarter of 2022. The net loss for Q4 2023 improved to $12.6 million, or $0.09 per share, from a net loss of $22.9 million, or $0.19 per share.

Source: Tada Images / Shutterstock.com

Amazon (NASDAQ:AMZN), with its AWS Braket service, provides a platform for experimenting with quantum computing. I think that AMZN could be one of the most undervalued FAANG stocks and one of the most underappreciated quantum players in the quantum computing industry.

AWS Braket is designed to speed up scientific research and software development for quantum computing. It particularly stands out with the launch of IonQ Aria, the first Quantum Processing Unit (QPU) on Braket to feature built-in error mitigation techniques.

On the financial front, Amazon demonstrated robust performance in the fourth quarter, reporting record operating profits of $13.2 billion, a substantial increase from the previous years $2.7 billion. Amazons revenue also surged by 14% year-over-year to $169.9 billion.

With many developers already familiar with the tools provided by AWS and its related certifications, it gives it a significant leg up over its competitors, thus making it a strong contender for the top spot in the quantum computing industry.

On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.

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The 3 Most Undervalued Quantum Computing Stocks to Buy in April 2024 - InvestorPlace