There's a global arms race among companies and nations to achieve supremacy in both quantum computing and AI, Woody Preucil at 13D Research recently explained to Financial Sense Newshour listeners.

Though many are still unaware of the events taking place—with significant breakthroughs just in the last couple of years—these two technologies are accelerating quite rapidly with heavy investments being made by the likes of Google, Alibaba, IBM, and, particularly, the militaries of China, Russia, and the US.

Here's some of what Woody had to say on our FS Insider podcast this week.

"There's a massive global race underway to achieve exascale and quantum computing supremacy and it's taking place in laboratories around the world: Santa Barbera, Oxford, Moscow, Zurich, Hefei, China, and elsewhere. The US has traditionally lead this race, investing about $200 million a year. The Department of Energy recently said that they would award $258 million to produce an exascale supercomputer with quantum processors but other countries are making even larger investments.

China is building a $10 billion quantum computing center. They are initially focusing on improving the stealth capability of their submarines and building a quantum computer that can break encrypted messages. The plan by their lead quantum scientist is that by 2020 or maybe earlier, maybe as soon as next year, they would achieve quantum supremacy with a calculation power of one million times stronger than all existing computers around the world combined.

Alibaba is also doubling R&D spending to $15 billion, focusing on quantum computing and AI. They've developed a public-private partnership with the Chinese Academy of Sciences and even the EU is investing a billion euros in quantum technologies: quantum communication, computing, sensing, and simulation.

There's growing concern in the US that we're at risk of falling behind. There was a Senate committee hearing recently and Arthur Herman, a fellow at the Hudson Institute, wrote a piece in the Journal making the case that the US will need a Manhattan-style funding focus to prevent a calamity. By June of next year, China will have a prototype exascale computer that's about 10 times more powerful than the top-ranked supercomputer, which is already from China—the Sunway TaihuLight supercomputer—and that computer is five times more powerful than America's fastest computer.

America does not expect to have an operational exascale supercomputer until 2021, but exascale supercomputers will really pale in comparison to quantum computers and that's because quantum computers use quantum bits instead of transistors and qubits can scale exponentially and so they can represent all combinations of 0s and 1s simultaneously. So, a 49 or 50 qubit quantum computer could reach the equivalent of 10 quadrillion bits and that would be capable of calculations that no classical computer could ever match.

Now China is advancing towards a 40 qubit prototype now—a universal machine. They have a machine now that can carry out calculations with five photons and is about 24,000 faster than prior experiments. Google has a 20 qubit machine now and they are expected to complete and test a 49 qubit universal quantum computer early next year.

At the International Conference on quantum technologies earlier this year, the discussion of their 49 qubit machine was expected to be the highlight, but at the conference a Russian-led team of American and Russian researchers announced that they had surpassed the theoretical threshold of quantum supremacy, which is a test that shows a quantum computer is operating in a quantum state and can solve problems that classical computers cannot...

Then, today, IBM announced that they had achieved a 50 qubit quantum computer and they had tested it and so now they are giving real competition to Google. So, it's really emerging as an arms race of epic proportions."

This technology is supremely important to government militaries. China, in particular, is hard at work to build a space-based hack-proof internet using quantum satellites.

"Right now all of security on the internet is based on public key encryption and it would take a normal computer thousands of years to factorize or break this encryption, but a quantum computer can factorize these numbers almost instantly and so it could undermine all current security protocols on the internet.

China has been putting a huge effort into quantum communication and is near completion of a 2000 km unhackable fiber communications network that links Shanghai with Beijing and they recently succeeded in teleporting entangled photons from the quantum satellite they had launched last year to two terrestrial stations a distance that was 10 times greater than anything previously. It was a major breakthrough for creating a new internet free from the risk of cyberattack but it also makes it nearly impossible for other governments to intercept their communication.

Ultimately, China wants to launch a fleet of quantum-enabled satellites, creating a global space-based hack-proof internet. And by 2020 they are talking about a nationwide quantum communications network developing a global grid by around 2030.

So quantum technology has huge implications for a lot of different things. Whoever produces the first universal quantum computer will probably take the lead across numerous fields: defense, aerospace, AI, machine learning, materials science, and, essentially, quantum computing holds the promise of supercharging artificial intelligence and machine learning..."

Apparently, our nations' leaders are taking this quite seriously. As Putin said in a recent meeting, the country that leads in AI will be "the ruler of the world." Though many still think this topic belongs to the realm of science-fiction, Woody said AI can now learn all by itself and also write its own code.

Once AI and quantum computing merge, Putin may be wrong about "who" exactly is in power.