Google's quantum chip ignites stock prices! How to pay attention to the market trends? (2024.12.11)

Hello everyone, this week's [Technical Tracking] will analyze Google. $Alphabet-A(GOOGL.US)$ Recently, the Nasdaq index has repeatedly reached new highs, historically突破ing the 0.02 million point mark, while Google's stock price has surged over 5% for two consecutive days, becoming one of the most eye-catching stocks. The factors driving Google’s stock price surge stem from the company achieving a key technological breakthrough in the field of quantum computing.

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On December 11, 2024 (Wednesday), Google's stock price rose more than 5% for two consecutive trading days, reaching a historical high. In news, Google’s quantum artificial intelligence team announced the development of a 'breakthrough' quantum computing chip named Willow, which has attracted wide attention in the technology community.

Google claims that the Willow chip can complete a benchmark calculation task in just 5 minutes, while the same task would take the most advanced supercomputers '10 to the 25th power years' to process! This astonishing comparison highlights the significant breakthrough of the Willow chip in terms of computing speed and efficiency, potentially opening up new possibilities for the future development of quantum computing.

Quantum computing is seen as the next generation's technological forefront by many technology giants, with its revolutionary potential being significant. Unlike traditional computers that use bits as their basic computation unit, quantum computers employ qubits as a whole new computation paradigm. This fundamental difference leads to a tremendous leap in performance. Traditional bits can only store one of two mutually exclusive states: either 0 or 1. However, qubits, thanks to their unique quantum superposition property, can simultaneously exist in both the 0 and 1 states. This characteristic endows qubits with greater information storage and processing capabilities, theoretically providing them with exponential computational potential far beyond traditional computers.

To intuitively understand this difference, we can make the following comparison: a traditional binary computer with 8 bits can represent 2 to the power of 8 (i.e., 256) different states, corresponding to any integer between 0 and 255. Meanwhile, a quantum computer with 8 qubits can represent and process all possible combinations of these 256 numbers simultaneously. This leap in parallel processing capability is precisely what makes quantum computing so promising.

The emergence of the Willow chip marks Google's achievement of the second key milestone in its ambitious quantum computing 'six-part' plan. The core of this breakthrough lies in successfully solving a long-standing challenge in the development of quantum computing: how to effectively reduce the error rate while significantly increasing the number of qubits. The Willow chip has about 100 qubits, while Google’s ultimate goal is to build a super quantum computer with 1 million qubits.

Once quantum Computing technology matures, it is expected to trigger revolutionary changes in multiple fields, such as large-scale drug development simulations, complex financial analysis, and computationally intensive tasks like advanced cryptography. However, industry experts generally believe that it may take several decades for this cutting-edge technology to move from the laboratory to widespread practical application.

Notably, Google's Willow chip employs superconducting qubit technology, which, while offering performance advantages, also brings significant technical challenges. Superconducting qubits need to operate in extremely low-temperature environments close to absolute zero, a demanding condition that not only increases system complexity and operating costs but may also limit the large-scale application and scalability of quantum Computing systems.

Technical Analysis

Trend analysis:

The weekly chart shows a robust and sustained upward trend in Google's stock price since the beginning of 2023. As of December 11, 2024, this uptrend has accumulated over a 120% increase.

The daily chart indicates that during the recent months of stock price adjustments, a potential head and shoulders bottom formation has emerged, with the neckline located around $169. This technical pattern is typically seen as an important reversal signal. Currently, this head and shoulders bottom pattern appears to have completed, potentially providing strong support for a new round of price increases.

Indicators interpretation:

● Google's stock price is currently above the major moving averages, which have formed a typical "bullish arrangement". Specifically, the short-term moving averages are above the long-term moving averages, showing an overall upward trend. A bullish arrangement is generally a strong bullish signal, indicating that the stock price has the intrinsic momentum for continuous increases.

● The MACD Indicators is currently located above the zero line, interpreted as a bullish dominant market, echoing the recent strong rise in stock prices. However, a warning signal worth noting is that, despite the stock price reaching an all-time high, the MACD Indicators failed to break above the previous high, which is an obvious "top divergence" signal and may suggest that the stock price is facing short-term correction pressure.

● The RSI has recently shown a rapid ascension, quickly breaking through the 70 overbought threshold. On one hand, this confirms the strength of the current upward trend, while on the other hand, it may also hint at the risk of a short-term decline in stock prices.

● Following Google's announcement of the development of the quantum computing chip Willow, a significant upward gap appeared on the December 10 Candlestick chart. This gap can preliminarily be confirmed as a "continuation gap," which is usually seen as a continuation signal of a strong trend, reflecting the market's positive reaction to this news and a sudden increase in participation interest.

Overall, Google's long-term trend remains bullish. The recent upward gap, followed by the stock price breaking above historical highs, collectively forms a strong bullish sentiment, highlighting investors' optimistic expectations for Google's future prospects. However, it is important to note that with the rapid rise in stock prices, some key Technical Indicators have begun to signal warnings. These signals increase the likelihood of a short-term correction in the market. If the stock price does indeed undergo adjustments, investors can closely monitor the potential support in the recently formed gap area.

This content discusses technical analysis; other methods, including Fundamental Analysis, may provide different perspectives. The examples provided are for illustrative purposes only and do not reflect expected results.

All investments involve risks, including the potential loss of principal, and there is no guarantee that any investment strategy will be successful.