Why IBM Rallied Today
Key Points
IBM and the Commerce Department announced Anderon, a quantum computing foundry.
IBM and the government will each contribute $1 billion to the effort.
The Commerce Department's funding of several other quantum companies signals quantum technology may be ready for prime time.
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Shares of International Business Machines (NYSE: IBM) rallied 11.3% on Thursday, as of 2:35 p.m. EDT.
IBM, as a large-cap stock, doesn't tend to move this much without quarterly earnings. But today, "Big Blue" was at the center of big quantum computing news, which also included the very newsworthy Trump administration.
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IBM unveils Anderon, the country's first quantum foundry
Today, the U.S. Commerce Department announced its intention to fund roughly a dozen U.S. quantum computing companies to accelerate the development of the technology. Among the awardees was IBM, which announced Anderon, what it calls, "America's first pure-play quantum foundry."
According to the news release, IBM and the Commerce Department have signed a letter of intent to build Anderon in Albany, N.Y., to which IBM will contribute $1 billion, with an additional $1 billion coming from the Commerce Department via the 2022 CHIPS Act funding.
While IBM has its own proprietary quantum computing technology under its corporate umbrella and is thus a competitor in some ways to the other "pure-play" quantum computing stocks being funded today, it appears that IBM will also aim to be the foundry for these competitors, producing their quantum chips in addition to IBM's own. In the announcement, IBM said it would use its 300mm wafer process, along with other advanced manufacturing technologies it has cultivated over many years.
CEO Arvind Krishna said:
IBM has pioneered quantum computing for decades. Our work in silicon wafer fabrication has been a key to IBM's success and will be critical to enable a broader quantum technology landscape that will reshape global innovation and economic competitiveness. With the support of the U.S. Department of Commerce, Anderon will be well-positioned to fuel America's fast-growing quantum technology industry.
Image source: Getty Images.
IBM has been a quantum leader
Today's announcement and government backing aren't so much a positive in and of themselves as they are validation that quantum computing may be ready for "prime time" in the commercial arena.
IBM has already led in quantum computing research for years, having deployed over 90 quantum computing systems, more than all other industry players combined. It also aims to deliver the first large-scale, fault-tolerant commercial quantum system by 2029.
Despite this record of accomplishment, investors seemed to view IBM's quantum efforts not as a major financial contributor but rather as a science experiment on the side of its main businesses. But today's announcement may signal that the technology will soon be ready to enter its wider commercial phase.
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Billy Duberstein and/or his clients have no position in any of the stocks mentioned. The Motley Fool has positions in and recommends International Business Machines. The Motley Fool has a disclosure policy.
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