Amazon has just joined its peers “Magnifice Seven” NVIDIA, Microsoft and Alphabet in the Revolution of Quantum IT.
Towards the end of 2024, a new pocket of the kingdom of artificial intelligence (IA) called quantum calculation began to receive some interest from the world of investment. Apparently overnight, stocks such as Ionq,, Quantum of the D waveAnd Rigetti Computing emerged as popular names leading the quantum IT charge.
Intelligent investors understand that the simple fact that a company is starting to increase in popularity does not necessarily make a choice of solid investment. Although the above companies have witnessed gains pronounced in recent months, a large part of the purchase activity has been rooted in momentum stories. As I have already expressed, if you are going to explore investment in quantum computers, I think that the most cautious options revolve around “Magnifix Seven” as members like Nvidia Or Alphabet.
Barely a few days ago, my magnificent stock of seven favorites, Amazon (Amzn 0.46%))announced an interesting development with regard to the quantum computer efforts of the company. Below, let’s explore how Amazon caused a sensation in the quantum revolution and assess how it could help to overeat the ambitions of the company’s long-term AI.
How does Amazon play a role in quantum computers?
Classic IT (which is what we use today) is built on a basis of code or binary bits, such as 0 and 1. Quantum IT does not follow such a linear approach. In quantum mechanics, qubits (quantum bits) can exist in several states at the same time – a phenomenon called superposition. In theory, this approach allows quantum computers to treat complex algorithms at faster speeds compared to classic computers today.
Although all this is great, Amazon scientists point this:
Vibrations, heat, electromagnetic interference of mobile phones and Wi-Fi networks, or even cosmic rays and space radiation, can all eliminate the qubits of their quantum state, causing errors in the quantum calculation carried out.
This decoherence results in high levels of qubit errors, a problem that Amazon seeks to solve. The new quantum flea of society, nicknamed Ocelot, integrates the correction of errors in its architecture. This is a unique approach, as this implies that fewer qubits must be integrated to counter the correction of errors. As such, calculation processes should be more effective (cheaper), which potentially gives Amazon an advantage because it seeks to build a quantum platform which can be easily put on scale.
Image source: Getty Images.
How could quantum IT help Amazon in the long term?
Over the past two years, Amazon has invested billions in an aggressive AI infrastructure plan. Some of the most notable movements in the company include the investment of $ 8 billion AnthropicAs well as the development of its own personalized silicon solutions – Trainium and Inferentia fleas.
Image source: Relations with investors.
Until now, the increase in capital expenses of Amazon (capex) seems to be paying. The company witnesses a notable acceleration in its cloud infrastructure activity, Amazon web services (AWS), coupled with growing profits. The combination of income acceleration and the widening of beneficiary margins offers Amazon financial flexibility to double its IA infrastructure investments, which now include a foray into quantum computer science.
Although the company continues to attend the competition from Microsoft and Alphabet, I think that the differentiated approach of Amazon with Ocelot with regard to scalability could lead to a faster acquisition of customers. Consequently, I consider quantum IT as a new exciting chapter for AWS – and which could lead to income and growth in the long -term profits.
Is Amazon Stock a purchase right now?
During the last month, Amazon’s shares dropped by around 11%. Although part of the sale is probably linked to macroeconomic concerns surrounding inflation or the unknown impacts of new pricing policies in Washington, I think there is a perceived risk with regard to Amazon in particular.
Namely, the management of the guide company More than $ 100 billion in capex spend this year. I think some investors can be tightened by this huge sum. But as I pointed out above, the majority of the company’s capex expenses were oriented towards AWS – a company that accelerates both on the upper and lower lines.
AMZN Price for free cash flows data by Ycharts.
However, investors do not seem to have joined the Amazon aggressive growth strategy. Currently, Amazon shares are negotiating for a Price cash flow in free (P / FCF) Multiple of 69 – Well below the average at five years of the company of 104. I find this disparity somewhat ironic since Amazon is a larger and more profitable company today than years ago. In addition, I think that the current levels of growth of the company are good to rise more as AI becomes more integrated through the wider ecosystem of Amazon.
The exploration by the company of quantum computer science underlines the commitment of Amazon to build a diversified AI platform, and I think that it will represent another investment which pays off in the long term. For me, Amazon Stock is currently a good deal for investors with a long -term time horizon.
John Mackey, former CEO of Whole Foods Market, a subsidiary of Amazon, is a member of the board of directors of Motley Fool’s. Suzanne Frey, director of Alphabet, is a member of the board of directors of Motley Fool’s. Adam Spatacco has positions in Alphabet, Amazon, Microsoft and Nvidia. The Motley Fool has positions and recommends Alphabet, Amazon, Microsoft and Nvidia. The Motley Fool recommends the following options: Long January 2026 Calls $ 395 on Microsoft and Court January 2026 405 $ calls Microsoft. The Word’s madman has a Disclosure policy.