Why IBM Stock Popped Today

Key Points

• The company's quantum technology was put through its paces by a global bank.

• It notably improved the prediction capabilities of a bond trading system.

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Quantum computing is a hot area of the tech field these days, and thanks to that, International Business Machines (NYSE: IBM) stock was popular on Thursday.

A convincing demonstration of its prowess in this technology wowed investors, who collectively pushed the company's share price up by over 5% that day. Speaking of convincing, that performance crushed the S&P 500 (SNPINDEX: ^GSPC); this slid by 0.5%.

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Quantum leap

The demonstrator was global bank HSBC. Before market open, the company announced it successfully ran a trial of algorithmic bond trading analysis, using a combination of traditional and quantum computing resources. IBM team members handled the technical aspects of the test.

Image source: Getty Images.

HSBC said that the trial indicated that this combination delivered as much as a 34% improvement over classical prediction techniques in predicting key information about a bond trade -- specifically, how high the possibility was that it would be filled at a quoted price.

In HSBC's press release on the trial, the bank quoted vice president of IBM's quantum unit Jay Gambetta as saying that it "shows what becomes possible when deep domain expertise is integrated with cutting-edge algorithm research, and the strengths of classical approaches are combined with the rich computational space offered by quantum computers."

Clients with deep pockets

It was clever of IBM to get involved in HSBC's effort to ramp up the technological foundation of an important securities trading activity. The tech company has clearly demonstrated that it can be a go-to partner for such well-capitalized clients, in a hotly competitive field where the stakes are high.

IBM isn't necessarily a top choice for investors seeking to capitalize on quantum computing, but perhaps this piece of news will help move that needle.

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HSBC Holdings is an advertising partner of Motley Fool Money. Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends International Business Machines. The Motley Fool recommends HSBC Holdings. The Motley Fool has a disclosure policy.