Google’s unbelievable claim

Hey Superheroes,

The Nasdaq hit 20,000 for the first time in history on Wednesday, marking a new milestone for the index that’s already outshined (up 34% YTD) both the S&P 500 (up 28%) and Dow Jones (up 16%) this year.

The recent rally came around Fed rate cut expectations next Thursday, which if it happens would follow the European Central Bank’s, Canada’s and the Swiss National Bank’s rate cuts this week.

In contrast, the RBA’s last meeting for 2024 kept our cash rate at the same 13-year high of 4.35%. While the central bank reasoned that underlying inflation was still too high, perhaps the AUD/USD hitting a 13-month low of <0.64 also played a part?

Either way, here are the stories you need to know.

Will Google’s new quantum chip change the world?

Over the week, Google’s shares jumped over 10% – that’s over US$200 billion added to its market cap in the span of four days.

And the news that caused it?

Its latest quantum chip “Willow” which Google claims can solve in five minutes a computation that would take the world’s fastest supercomputer 10,000,000,000,000,000,000,000,000 years (that’s 1025) to do.

For the record, the universe is younger than that.

🍟 What in the universe is a quantum chip?

We won’t be able to go too scientific here, but basically, a quantum chip uses quantum physics principles to perform calculations. Unlike classic computers that store information in “bits,” quantum chips use “qubits,” which can have exponentially more computing power than bits.

A quantum computer (using quantum chips like Willow) can therefore truly change the world, especially in areas of medicine and technology. It would supercharge AI development and even render today’s encryption system entirely obsolete.

💻 Introducing Willow

Now that’s amazing and all, but in reality quantum chips and computers have a significant flaw which researchers have been trying to crack for decades.

It’s the fact that “qubits” are highly sensitive to external (and even internal) interference. Yup, this means tons of errors. This is also a case where the more qubits you use, the worse it gets. Pre-Willow versions of Google’s quantum computer lasted only 200 microseconds before it was swamped with errors.

However, Google now claims that its results show that the more qubits used in Willow the more it has reduced errors – a massive win for quantum computing.

📝 Will it affect Google’s bottom line?

Willow has 105 physical qubits and can now last 100 microseconds before the errors.

While that sounds cool, reality requires millions or even billions of qubits, without the errors, to make quantum chips actually usable. It also means that Willow can’t even last the five minutes it needs to actually solve that 1025 -year computation.

So while the news excited shareholders this week, perhaps the reality is that Willow is just not quite there yet.

The ASX’s biggest IPO in six years

Guzman y Gomez’s IPO may have taken the ASX by storm this year but it’s another company that’s breaking records before the year ends.

Data Centre manager, DigiCo (ASX:DGT), boasted a A$2 billion IPO (in contrast to GYG’s A$335m), nearly more than the ASX’s total IPO deal values for both 2022 (A$1.1B) and 2023 (A$1.1B) combined. It started trading on the ASX earlier today.

DigiCo is set to capitalise on the 19 to 22% CAGR that data centres are forecasted to see in demand.

🏢 Annual yield target

Launched by asset manager HMC Capital (ASX:HMC), DigiCo operates as a digital infrastructure REIT, which stands for “Real Estate Investment Trust.”

REITs generally own a portfolio of properties which it collects income on to be distributed to shareholders.

DigiCo will initially own 12 data centres in the U.S. and Australia. Investors are guided by a target 4% annual distribution yield.

🔦 Some other things we’re shining the Spotlight on:

WHAT IS RINCON: Rio Tinto has approved a A$2.5 billion expansion of its Rincon lithium project in Argentina, marking the company's first major lithium operation. The project is expected to last 40 years, with production set to start in 2028. CEO Jakob Stausholm said Rincon will be a key part of the company’s commodity portfolio in the coming decades.

GOOD FOR MUSK: Tesla's shares soared to a record high of US$429 on Thursday, fuelled by investor optimism that Tesla will benefit from CEO Elon Musk's relationship with President-elect Donald Trump. The previous record of $415 had stood for more than three years.

GENEROUS OFFER: Bain Capital has proposed a A$1.7 billion takeover of Australian wealth management firm Insignia Financial, offering A$4 per share — 17.6% above its closing price on Thursday. The news caused Insignia’s stock to soar by more than 10% in the final minutes of trading.

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