In a post on Google's blog page Monday, Alphabet was "delighted to announce" that it has invented a new quantum computing chip called Willow.
Although Alphabet is first and foremost a software company, specializing in internet search and advertising, the tech giant also places "Other Bets" on emerging technologies it believes might grow large enough to move the needle on its $340 billion business -- and quantum is one of them. In its post, Alphabet noted Willow successfully performed "a standard benchmark computation ... that would take one of today's fastest supercomputers" 100,000,000,000,000,000,000,000,000 years to solve.
It took Willow just five minutes.
Admittedly, Willow isn't ready to commercialize just yet. Alphabet says it's been working on the chip for 10 years and is still only at step two on the six-step timeline it has mapped out. Still, the company says it has confirmed that the bigger it makes a quantum chip, the more accurate the chip's results, and it claims the error rate falls by about half with each improvement. Alphabet will next attempt to use Willow to solve real-world problems.
Long story short, Alphabet has made a technological breakthrough in quantum computing, and it now possesses what's arguably the best quantum chip in the world. Its stock is also, arguably, cheap enough to buy even if quantum doesn't move the needle for Google.
Priced at $2.3 trillion, with $94 billion in annual income, Alphabet stock costs 24.1 times trailing earnings today. At its projected long-term growth rate of 16% annually, that works out to a 1.5 PEG ratio -- not cheap, but also not at all unreasonable.