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Wait, Even Computers Have Alternative Facts Now? (Cestrian Stocks Bulletin #17)

Wait, Even Computers Have Alternative Facts Now? (Cestrian Stocks Bulletin #17)
By Cestrian Capital Research, Inc • Issue #17 • View online
Digital computing represents the absolute apogee of the Enlightenment project. Problems solved with absolute and binary certainty using deductive logic. But just as the world is now moving beyond the rules-based modernist era, so too is computing. Here we consider the state of quantum computing.

DISCLAIMER: This note is intended for US recipients only and, in particular, is not directed at, nor intended to be relied upon by any UK recipients. Any information or analysis in this note is not an offer to sell or the solicitation of an offer to buy any securities. Nothing in this note is intended to be investment advice and nor should it be relied upon to make investment decisions. Cestrian Capital Research, Inc., its employees, agents or affiliates, including the author of this note, or related persons, may have a position in any stocks, security, or financial instrument referenced in this note. Any opinions, analyses, or probabilities expressed in this note are those of the author as of the note’s date of publication and are subject to change without notice. Companies referenced in this note or their employees or affiliates may be customers of Cestrian Capital Research, Inc. Cestrian Capital Research, Inc. values both its independence and transparency and does not believe that this presents a material potential conflict of interest or impacts the content of its research or publications.
We May Soon All Identify As Non Binary
Every genuinely new technology begins with a few enthusiasts with bad hair in a lab. It might be a university lab, it might be corporate, it might be government. Either which way, the exciting hope for the future usually looks like something out of Back To The Future which is to say poorly assembled with various bits of wire hanging out the side, no user manual, and unpredictable errors that can be handled only in person by Bob The Hardware Whisperer. The telephone started this way; Ethernet started this way; ARPANet aka the Internet started this way. Transistors and integrated circuits started this way.
Another defining characteristic of a genuinely new technology paradigm is a large ratio of naysayers to proponents. That band of lab rats working on the hissing, steaming, vibrating device? Nobody wants them to succeed, lest they become heroes, or, worse, rich. So surrounding the project you find a veritable chorus of, “It’ll Never Work” from armies of other scientists, mathematicians, businessfolk and investors. This is a leading indicator of success, in fact. Because geniunely new technologies are threatening to the existing order. If you were a thermionic valve manufacturer in the 1940s you were happily selling your overpriced lightbulbs to AT&T all the while its research arm, Bell Labs, was trying to put you out of business developing those dang transistor gadgets that will obviously never work or, even if they do, won’t work for the high end kit that we supply into.
Right now, quantum computing is right there. It has its bad-hair proponents - spread across four budding systems vendors, being D-Wave, IonQ, Rigetti and, oh yes, IBM; and its detractors which are legion. Ask any self respecting physicist quietly whether s/he thinks that quantum computing is going to be a thing in the real world - you’ll get a lot of nuh-uhs. This only serves to pique our interest as investors further.
What Is A Quantum Computer?
Quantum computing, the paradigm, is a potential salve to the constraints that Moore’s Law and other physical factors – heat generation, energy efficiency - are beginning to impose upon classical computing.
For the uninitiated, classical computing is the world you know and indeed follows the rules of the world you can see, feel and interact with. It utilizes small form factor, highly standardized integrated circuits, typically manufactured using a silicon substrate (in more esoteric applications you might find gallium arsenide). These ICs contain many millions of transistor gates which can store a zero or a one value; binary code is the key to classical computing. When you click, “Like”, your computer translates that through a number of different abstraction levels until the CPU hears a binary string, and then outputs a binary string based on your instructions.
Advances in classical compute power have been a function of many things, but the number of transistors packed onto any one integrated circuit die has been one of them. The Moore’s Law of which many of us have heard, but few of us truly understand, was coined by Gordon Moore, founder-CEO of Fairchild Semiconductor and of Intel, and has to do with the number of transistors per chip. But you’ll hear Moore’s Law cited as a catchall for the mounting challenges in conventional computing, be it heat output, power consumption, ability to deal with complex uncertain multivariate calculations, and so on and so forth.
Quantum computing is not based upon ones and zeroes, but instead on probabilities and multiple simultaneous truths. You might think of classical computing as the Bauhaus of computing – the epitome of the Enlightenment Age. Linear to the last. And you might consider quantum to be truly postmodern in nature; facts and alternative facts being absolutely compatible within quantum logic.
A quantum computer doesn’t operate using transistor gates occupying only binary states – bits with value one or zero. It operates using ‘qubits’ with a value of one or zero or both. Qubits exist as energy states within superconducting loops in a quantum computer, the same way that bits exist as voltage at a transistor gate. Qubits can be a single value of zero or one – once a computing problem is solved, a qubit has reached its lowest energy state (which could be zero or one); but in the main occupy multiple simultaneous values.
If classical computing is ideally suited to linear tasks such as arithmetic, measurement, storage and so forth; quantum is ideally suite to nonlinear, multivariate and/or iterative tasks such as optimization problems. The simple question of route optimization isn’t really a simple question. The real question is multivariate. It is, “in what order should I deliver these Amazon parcels, given the weather, the cost of gas last week when I filled the tank, the degree of irritation each specific customer experiences when I am late, the proclivity of customers with irritation level X to switch from Amazon to other vendors, and the specific-customer profitability of each customer on my route”. The data – the variables – required to answer the question can be stored in any typical, classical database. But solving that problem efficiently and quickly? That’s better suited to a quantum device.
Unfortunately, you can’t buy a quantum laptop yet. In fact unless you can mainline liquid nitrogen into your home (which may cause an unusually robust family argument about whether to turn the heating up or not), you can’t run any kind of quantum computer at all. On account of they look a lot like this:
IBM Quantum Computer (Original Image Source: Science Magazine)
IBM Quantum Computer (Original Image Source: Science Magazine)
Fortunately, if you want to ask Siri some really hard stuff that neither s/he nor Alexa can answer, and you decide that in any event it’s not really a yes or no you’re looking for, more a maybe and a probably, you can now submit queries to a real working quantum computer courtesy of … no, not Bob … Amazon AWS. Yep. That Amazon. Allow us to explain.
1-Day Shipping For Qubits
AWS Braket is a service offered by Amazon wherein you the customer can submit queries to the Leviathan, which then routes your query to either a classical or quantum computer for processing. Classical devices are your regular servers that live in AWS datacenters; quantum are owned and operated by D-Wave, Rigetti and IonQ, the privately-owned systems vendors to whom we referred above. And in order to alleviate the programming burden (you know many developers who speak Qubit? No, us neither) Amazon works with a pre-revenue software & services company, Quantum Computing, Inc, which provides an abstraction layer akin to a compiler to enable those queries to be ‘published’ to quantum systems.
Back in January this year, we spoke at length to the CEO of Quantum Computing, Inc (the stock is traded on the OTC market - it’s awaiting a full Nasdaq listing. The ticker is QUBT). Bob Liscouski - different Bob - is probably the most modest CEO we’ve spoken to in our long years of technology investing. If you have a moment you might read our interview with Liscouski, here. (You can skip some of the quantum computer definition stuff, as we repeated it in this note).
Following publication of that note above, the company reached out to us with an offer to speak to Liscouski once again, together with Richard Moulds, GM at Amazon Braket. And how could we refuse? We took up the offer and we present a brief note of that conversation below for your consideration.
Moulds’ background is in cryptography and indeed he joined Amazon AWS on the cryptography side initially. Two years ago he moved toward the quantum project and fifteen months back, Amazon launched AWS Braket. Moulds is based in Seattle, the mother lode of computing-on-demand. He and his team have built Braket as the billing and reselling and routing entity we describe above.
As we noted in January, QUBT remains on the trail of defining use cases. The hope for quantum is that it can solve multivariate problems faster and/or more efficiently than the classical equivalent. These might be inventory control, supply chain, distribution routing or other such constrained-optimization challenges. Whether quantum as a computing architecture can in fact deliver this or another kind of advantage is yet to be proven, and as we note above, there are plenty of detractors. But between QUBT and AWS Braket, you have software and services that can interface with the real world of things in order to process instructions in the quantum domain of facts and alternative facts. So the challenge is on. Here we have two grownup executives heading up efforts to commercialize this new computing platform. This doesn’t happen often in one’s investing career, and we’re excited about it.
We will continue to profile the progress of QUBT and with it the role of AWS in the company’s evolution. We don’t own QUBT in staff accounts at the moment - we want to wait until the stock achieves a main market Nasdaq listing (this has been applied for) before we take the plunge.
In the meantime, if you yourself are quantum-curious and your company has a business problem that may be solvable easier with probabilities than certainties – you might want to give QUBT or AWS a call. And if you do, let us know how you got on.
Cestrian Capital Research, Inc - 19 May 2021
DISCLOSURE - Cestrian Capital Research, Inc staff personal account(s) hold long position(s) in AMZN.
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