HSBC has successfully used an IBM quantum chip to make better guesses at bond prices.
Bond price predictions were 34% more accurate using IBM quantum chips than using ordinary computers.
HSBC says “we are on the cusp of a new frontier of computing in financial services.”
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International Business Machines (NYSE: IBM) stock jumped 1.6% through 10:30 a.m. ET Friday after Morgan Stanley analyst Erik Woodring called it the “clear leader” in quantum computing.
Curiously, the reason Morgan Stanley said this stems from another announcement by another bank entirely: HSBC (NYSE: HSBC).
HSBC says that it “successfully used quantum computing in a trial to optimize bond trading, making it the first in the world to prove the value of the powerful emerging technology in the financial services industry.” More importantly to investors, though, HSBC used a “Heron” quantum processor from IBM to accomplish this.
As CBS reports, use of the IBM quantum chip helped HSBC deliver “a 34% improvement in algorithmic bond price predictions” (i.e., it helped HSBC better predict bond prices before they happened, so that HSBC could more effectively buy low and sell high).
Better accuracy in predicting bond prices should naturally translate into better profits for HSBC as it trades bonds. That’s good news for HSBC. It’s almost certainly good news for IBM, too, which now has a real-world example of how banks can use its quantum computers to make money — that they can then spend on buying more IBM quantum computers!
More broadly, though, this development is good news for investors in quantum stocks in general. As HSBC explained, “we have great confidence we are on the cusp of a new frontier of computing in financial services, rather than something that is far away in the future.”
And that means the day when current money-losing quantum stocks start earning profits could be a lot nearer than many investors think.
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