A lot of companies are competing to build the world’s biggest, baddest quantum computer. The two leaders are IBM (which I own) and Google, which saw $250 billion added to its market cap last week on its quantum news.
Several smaller companies, like D-Wave Quantum (which I also own) and Rigetti Computing, are also competitive and have seen 5-10x returns in a matter of weeks.
But rather than bet on who will win the quantum computing boom … or chase the biggest winners higher … we’re going to attack this from a different angle.
A Revolution in Cybersecurity
Quantum computers represent a huge threat — and opportunity — within the field of cybersecurity.
They can break any encryption, at least in theory. So they’re a massive security concern.
It’s why Apple has recently embedded its iPhones with post-quantum security.
It’s actually slightly terrifying. I see this as one of the greatest threats to civilization since the atomic bomb. And, it requires a new Manhattan Project. A race to build the most powerful quantum technology … and security … before, well, China.
Enter Arqit Quantum (ARQQ), a leader in quantum security based in the UK. Some of their focus areas include finance, data centers and defense.
Its flagship product is QuantumCloud, which as its name suggests offers cloud-based quantum security-level encryption. So, this is encryption that is so ridiculously complicated, not even a quantum computer can break it.
It’s also accessible. Through its “Platform as a Service” (PaaS) technology, the software can be uploaded to any device.
The company is also collaborating with Intel, providing encryption software for the company’s Xeon processors. From David Williams, Chairmen and CEO:
“Our collaboration with Intel delivers the groundbreaking introduction of the world’s inaugural quantum-safe, 1.89 Tb IPsec solution. Cyber threats continue to become more sophisticated, including the imminent advent of quantum computing, enterprises seek robust defences. Our joint effort with Intel provides off-the-shelf products that not only harden networks but also make them quantum-safe whilst adhering to core standards like RFC 8784.”
I added the bold for emphasis. This is the real key.
I think there is going to be massive demand for both the company’s stockand its products over the next year. Tech firms are going to feel pressured to adopt quantum security solutions as more and more people become afraid of this new tech. And stock speculators are going to bid the stock higher in anticipation.
ARQQ has a market cap of around $370 million, putting it firmly in the microcap territory that I like to see for potential 10x gains.
The stock trades for around $27 per share at the time I’m writing this up. That makes it significantly more expensive than some of the other quantum stocks I’m seeing, which trade for $7 … $9 … and $11.
A higher share price is good. It means the stock has a lower float than some of the other small quantum stocks and hence is a bit more difficult for hedge funds to short it. And indeed, it has a lower short-interest percentage than some of these other companies as a result.