Efficient Market?

Summary:

• Shares of Alphabet are trading up over 4% this morning, and outside an earnings report, it would be the largest upside gap for the stock since March.
• This morning’s gap higher is also poised to take out short-term resistance from the post-election highs, putting the stock at its highest level since mid-July.
• Besides the fact that GOOGL stock is trading higher this morning, other stocks involved in the quantum computing space are trading lower.

Shares of Alphabet (NASDAQ:GOOGL) are trading up over 4% this morning, and outside an earnings report, it would be the largest upside gap for the stock since March. This morning’s gap higher is also poised to take out short-term resistance from the post-election highs, putting the stock at its highest level since mid-July. So what’s the news driving the stock higher this morning?

There are only two notable stories out regarding the stock. The first is an analyst report from Piper Sandler naming GOOGL the top mega-cap stock to own in 2025. The analyst cited a product-driven resurgence and survey data showing that the company leads among its peers in AI. A bullish analyst report can always boost a stock, but a 4%+ rally in a company with a market cap of over $2 trillion? That seems a little excessive.

The only other catalyst being cited is a breakthrough the company announced in quantum computing where its Willow chip was able to solve a problem in five minutes that “would take one of today’s fastest supercomputers 10 septillion (that is, 10²⁵) years – a number that vastly exceeds the age of the Universe.” The math problem the chip solved has no commercial applications as of yet, but it still marked a major breakthrough in quantum computing and seems to be a promising start. Besides the fact that GOOGL stock is trading higher this morning, other stocks involved in the quantum computing space are trading lower, indicating that this news is the more likely driver of the rally in GOOGL shares versus the Piper report.

What makes the rally in GOOGL shares this morning somewhat puzzling has to do with the timing of the news release. Below is a post from the company on X, discussing the breakthrough with its Willow chip, with a link to the company’s blog post about it. Looking at the bottom left, you can see that it was posted on Monday morning at 11:46 AM Eastern time. In other words, when the news of this chip was released, the market still had more than four hours of trading in which to react to it yesterday. During that time, the stock actually traded down marginally from the time of the release through yesterday’s close. Nothing clears the mind like a good night’s sleep, and after sleeping on the news last night, the market likes what it read!

Original Post

Editor’s Note: The summary bullets for this article were chosen by Seeking Alpha editors.