Alphabet’s Echoes algorithm just achieved a major quantum AI breakthrough.

Elon Musk says Alphabet’s achievement is making quantum computing more relevant.

Despite Google’s progress, other quantum computing stocks are getting more fanfare.

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Whenever a new megatrend emerges, it seems inevitable that adjacent opportunities will emerge seemingly out of the woodwork – promising to bring similar levels of abnormally high returns.

For the last three years, the main theme fueling the stock market to new highs has been artificial intelligence (AI). Broadly speaking, AI stocks include companies operating in the semiconductor and software industries. However, certain ancillary markets such as nuclear energy and infrastructure have also benefited handsomely from the AI revolution.

Recently, however, a new pocket within the AI realm has become the newest shiny object for growth investors: quantum computing.

Let’s unpack why quantum AI is generating so much buzz. From there, I’ll cover a recent quantum breakthrough that Alphabet (NASDAQ: GOOGL) (NASDAQ: GOOG) just achieved and explain why Elon Musk’s subsequent commentary should carry so much weight.

Quantum AI is promising to upend the computing world. Traditional systems rely on binary bits (ones and zeros) to process algorithms and programs. Quantum computers, by contrast, use qubits.

Qubits can exist in multiple states at once, a property known as superposition. In theory, the value proposition here is that quantum systems can model multiple outcomes at the same time, rather than evaluating one possibility at a time. This could prove to be particularly useful in complex simulations – from enhanced financial risk management to predicting weather patterns to clinical research.

Global management consulting firm McKinsey & Company is forecasting that quantum applications could add trillions in economic value over the coming decades. While quantum computing remains largely experimental, notable names outside of the technology world – including JPMorgan Chase, Amgen, and Honeywell – have been investing in quantum businesses as of late.

Image source: Getty Images.

Alphabet – the parent company of Google – is best known for its businesses spanning internet search, consumer electronics, and cloud computing. But underneath the broader umbrella, Alphabet is home to a number of subsidiaries exploring moonshot opportunities.

For example, Waymo is Alphabet’s autonomous robotaxi operation, while DeepMind is the company’s AI research lab, partially responsible for leading the charge in Google’s pursuit of developing quantum applications.

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