Quantum computing race now diverges: Goldman Sachs reduces bets, while Morgan Stanley defies trend by increasing holdings in 50-person team.

Goldman Sachs Group, Inc. (GS.US) and JPMorgan Chase & Co. (JPM.US) have taken radically different strategies in taking advantage of the wave of quantum computing on Wall Street, highlighting the uncertainty that this technology, often touted as the next major breakthrough after artificial intelligence, is facing. Goldman Sachs Group, Inc. scaled back its investment after internal research showed that existing hardware was far from being able to achieve practical investment applications. In contrast, JPMorgan Chase & Co. continues to increase its investment, maintaining a team of over 50 physicists, mathematicians, and computer scientists, focusing on exploring the potential applications of this technology across all lines of business. A few years ago, Goldman Sachs Group, Inc. held a dominant position in this field - not only recruiting expert teams but also partnering with Amazon.com, Inc. to test whether quantum systems could enhance the returns of high net-worth client investment portfolios. However, according to reports, the test results were alarming: researchers found that a certain algorithm would take millions of years to run and require around 8 million logical qubits, while current quantum computers generally have less than 100 qubits, showing a huge performance gap. Subsequently, Goldman Sachs Group, Inc. incorporated the quantum project into more extensive cost-cutting measures, reducing related investments. JPMorgan Chase & Co., on the other hand, took the opposite path, continuing to advance research in portfolio construction, machine learning, pricing models, and network security scenarios. Quantum computing, based on principles of quantum mechanics, theoretically can solve specific problems at a much faster speed than traditional computers. Supporters believe it has enormous potential in fields such as drug development, logistics optimization, fraud detection, and financial risk modeling, but several experts point out that commercial applications may still require several years. In general, the banking industry often faces a particular structural challenge when laying out quantum computing: they are simultaneously pursuing an extremely broad range of potential uses, covering asset pricing, portfolio optimization, encryption technology, and even fraud detection in multiple areas. This "casting a wide net" style of exploration means that research resources are highly dispersed and it is difficult to concentrate on breaking through a specific scenario in the short term and quantify its return. Therefore, the return on investment in the near term is more difficult to validate. JPMorgan Chase & Co. has stated that they have made progress. Last year, the company announced that they were using Quantinuum hardware to handle rapidly changing data more efficiently for fraud monitoring and network analysis. Additionally, they have partnered with Amazon.com, Inc. to showcase a tool aimed at enhancing diversified investment portfolio selection. Some experts suggest that with continuous hardware improvement, practical quantum applications may appear in the coming years. It is worth mentioning that McKinsey predicted last year that quantum computing revenue will increase from approximately $4 billion in 2024 to $72 billion in 2035. Other banks are also conducting similar experiments: UBS Group AG (UBS.US) is training quantitative analysts, Santander is exploring portfolio optimization, Credit Agricole is researching credit risk models, and HSBC is testing anti-money laundering and bond trading applications. However, many now admit that early expectations were overly optimistic. Rigetti Computing CEO Subodh Kulkarni bluntly stated that the industry's promises far exceed its short-term capabilities. Currently, it seems that Wall Street's strong push for quantum computing is more about being prepared than profit-making. Goldman Sachs Group, Inc. has chosen to step back. JPMorgan Chase & Co. is still betting that patience will eventually pay off.