Tech breakthroughs are still coming

Do we live in a time of technological exhaustion, where there are too few big breakthroughs and competition is fought out by small incremental improvements on old ideas? Or are we on the verge of an accelerating transformation, where technological advances on many fronts will unlock vast new digital markets?

This question has strong proponents on both sides and is fundamental to any investment view on technology right now.

Proponents of “tech lethargy” claim that a handful of large tech monopolies are stifling innovation elsewhere and that the incentive system no longer rewards genuine risk-taking. At the most basic level, the engine that has propelled the technology for decades — the trend of exponential growth in computing power — has steadily declined as efforts to etch ever smaller feature sizes on silicon chips are pushed to the limits of physics.

However, this ignores the very real advances in specialized processor designs that have transformed the chip industry. Nvidia, which makes graphics processors that have become the main workhorse in today’s artificial intelligence systems, leaving the acquisition of chip design company Arm last month under regulatory pressure.

But this week it continued with the announcement of one new Arm-based chip that represents a leap in performance in the central processing units that power most data center computers – a direct challenge for Intel and AMD, which dominate this market.

At the same time, a completely new form of computing based on quantum physics is approaching practical application. Laying the groundwork for the time when quantum processors—which aren’t limited to processing each step of a calculation in sequence, but can consider a range of possible answers at the same time—will once again massively accelerate the training of AI systems.

Hardware breakthroughs like this are just the first step. Bringing them into the mainstream requires creating an entire technology “stack”—the layers of software needed to run the new computing systems and create platforms on which other developers can build new types of applications.

A sign of how this broader technical foundation is being laid came this week with news that Sandbox had been AQ, a quantum software unit of Alphabet spun out with more than $100 million in new financial support.

Sandbox has been working on the software and tools to apply quantum technology to practical problems such as B. increasing the security of cryptography and developing new types of advanced sensors. The only thing such ideas have in common is the fact that they could not be tried before.

Even before the new hardware is ready, such applications will be built on “classical” computers that simulate how the quantum systems will work. Other pure-play quantum software companies like QC Ware have been working closely with companies involved in industries like finance and materials science and expect to do so soon the first practical applications being found.

Although Nvidia is a chipmaker, it’s also increasingly turning to software to try to bring its technology to wider application. Nvidia’s secret weapon for some time has been the Cuda software, which allows developers to use its graphics chips for new forms of advanced computing – making it what CEO Jensen Huang likes to call the “operating system for AI”.

It is now increasingly turning to the software needed to expand AI into new markets. This includes autonomous driving and the creation of more realistic digital worlds, whether for the 3D experiences known as “metaverses” or digital recreations of the real world that can be used to run simulations and predictions. Never one to shy away from looking far into the future, Huang summoned $300 billion worth of new software markets that would now be open to his company.

Nvidia’s stock, valued at about 70 times sales at its peak last fall, was vulnerable as the stock market turned late last year and it fell more than a third. But after the middle of this month, they rallied about 30 percent in anticipation of the company’s recent announcements — a sign that there are still plenty of investors willing to believe in an expansionary future.

When that will happen is another matter. Driverless cars — one of Nvidia’s biggest bets — are years behind schedule. And for all the talk in the tech industry about metaverse, it’s not clear when or how these immersive digital realms will start impacting the everyday lives of ordinary people. But at least the new technical bases come into play.

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