Big Blue’s market cap just got a whole lot bigger.
The news: IBM (IBM) stock surged over 11% on Thursday following a landmark announcement by the US Commerce Department detailing a $2 billion CHIPS and Science Act initiative to fund domestic quantum computing firms.
The move added about $26 billion to IBM’s market cap, bringing it to $237.8 billion.
Shares continued their rally on Friday, with a premarket gain of 3%.
IBM secured the single-largest allocation in the program — a $1 billion government grant — which the tech giant will match with $1 billion of its own capital to construct “Anderon” in Albany, New York. It’s being billed as America’s first pure-play, dedicated 300mm quantum chip manufacturing foundry.
The hype around this deal reflects a transition in IBM’s quantum roadmap from a long-term research and development project into a critical national-level manufacturing platform. In turn, the company is viewed as the primary infrastructure and foundry provider for its own hardware and that of its competitors.
The analysis: Most analysts on Wall Street have come out in favor of the news.
Evercore ISI analyst Amit Daryanani explained, “We view this development as a positive for IBM and it should reflect confidence in their quantum roadmap. As a reminder, IBM views quantum as a multibillion dollar opportunity (quantum expected to generate $850 billion in economic value by 2040).”
“IBM has a >$1 billion quantum book of business (total signings value since inception) that is growing each quarter,” Daryanani added. “From a quantum strategy perspective, IBM is approaching the opportunity with a fully vertically integrated technology offering from processors and cryogenic systems to software (Qiskit) and real-world partnerships.”
The bottom line: A small reminder before you view IBM as the next hot growth stock: It will take a long period of time for the company to drive sales and profits from this quantum news. At its most basic level, remember, IBM still has to build Anderon.
So don’t expect a financial windfall to appear in the company’s second quarter earnings release in July/August.
