Quantum computing is hard to understand and even harder to explain. In fact, the very definition of quantum computing, as supplied by IBM, is “a rapidly emerging technology that harnesses the laws of quantum mechanics to solve problems too complex for classical computers” — let alone human beings. But if this technology works out its kinks and catches on, big profits are likely in store for companies in the right space.
What Are the Best Quantum Computing Stocks?
These seven stocks are the current leaders in quantum computing stocks:
- IonQ (IONQ)
- Nvidia (NVDA)
- IBM (IBM)
- Honeywell (HON)
- Microsoft (MSFT)
- Alphabet (GOOGL)
- FormFactor (FORM)
The best quantum computing stock is likely to be on this list, but it’s impossible at this time to determine with absolute certainty which one will be the big winner. But with most CEOs across the globe dumping money into the growing field, it likely means that quantum computing stocks in general could have potential.
1. IonQ (IONQ)
Any discussion of quantum computing stocks has to begin and end with IonQ. The company, which was formed via a merger with the special purpose acquisition company dMY Technology Group III in 2021, is the only pure-play quantum computing investment available on a public stock exchange.
If you ask whether IonQ is a good investment, however, that may be another story. The stock is certainly capable of huge gains, as demonstrated by its stratospheric 370% gain as of July 26 that made it one of the best stocks to own in 2023. However, even though the company has signed partnerships with big tech players, it remains a startup with little revenue and no profits. In the investment world, this translates to a speculative company capable of huge gains or huge losses.
2. Nvidia (NVDA)
Nvidia has been all over the news in 2023 for its stellar YTD gain of 211% — a huge move for a stock with a market capitalization of over $1.1 trillion. But while its industry-leading position in chips that are used for artificial intelligence applications has helped the stock continue to rally, even more gains may be ahead thanks to its progress in the quantum computing industry.
In partnership with Quantum Machines, Nvidia debuted DGX Quantum in May 2023, the first system to couple GPUs and quantum computing. Given the company’s powerful position in the GPU industry, it’s no small stretch to expect the company to benefit from the rise of quantum computing as well.
3. IBM (IBM)
IBM might be considered “old tech” by some investors, but they’d be missing out on the company’s exciting forays into the field of quantum mechanics. The company has a whole division, aptly named IBM Quantum, that makes quantum hardware available to hundreds of thousands of developers and is the largest quantum computing fleet in the world. The company also built Qiskit Runtime, a quantum computing service and programming model, to allow businesses to create algorithms that can be run at scale.
With a built-in customer base of hundreds of Fortune 500 companies, IBM may actually have a leg up over smaller companies or startups in the industry.
4. Honeywell (HON)
Honeywell is a diversified, $138 billion conglomerate whose technology division has been hard at work to compete in the quantum computing space. Recently, the company’s Honeywell Quantum Solutions business merged with Cambridge Quantum to form Quantinuum, which is now the world’s largest integrated quantum computing company. The company aims to develop quantum applications in a wide variety of industries, from pharmaceuticals, chemicals and finance to aerospace and defense, oil and gas, manufacturing, telecom and others.
Specific applications already underway at the company include InQuanto, a quantum chemistry software package, and Quantum Origin, designed to offer superior protection in the form of quantum-based cybersecurity.
5. Microsoft (MSFT)
It’s hard to think of computers at all without thinking of industry giant Microsoft. The legacy tech company that still holds world domination over computer operating systems is already neck-deep in quantum computing applications. In addition to its Azure Quantum Cloud Service, which provides hardware, software and solutions all in a single cloud-based package, the company is working on solving the world’s hardest problems through the creation of a “full-stack, fault-tolerant quantum machine” that will have the capacity to perform 1 quintillion operations making no more than a single error.
Microsoft’s stock price has bounced nicely in 2023, up over 40%.
6. Alphabet (GOOGL)
Alphabet, the parent company of Google, is much more than a search engine. The diversified technology company actually has fires burning on many fronts, and it was actually one of the first large companies to foray into the world of quantum computing. Way back in 2018, the company unleashed a 72-qubit quantum processor known as Bristlecone, and in early 2023, Alphabet announced a breakthrough in the quantum computing market. One of the problems with quantum computing in its infancy has been its predilection to make errors, but engineers made major strides in solving this problem through a method of clumping physical qubits.
Coupled with the company’s demonstrated technical excellence in other fields, the stock could be a good long-term play, as it seems as if its quantum computing efforts are already paying dividends.
7. FormFactor (FORM)
FormFactor, a relatively small company with a market cap of just $2.62 billion, is an interesting player in the industry as it doesn’t directly develop quantum computers or software. Rather, it plays an essential role for companies that do by providing the cryogenic environments necessary for this type of computing to work.
Specifically, the company’s dilution systems, as explained by FormFactor, can create ultra-low temperatures below 10 mK that are essential for qubit and quantum processing unit development, and for quantum computer deployment. Other applications include an ultra-low-vibration chip-scale probe station used for high-accuracy measurement at these truly incredible temperatures. In a nutshell, FormFactor provides the equipment and ultra-cool environments that allow the magic of quantum computing to occur.
The Bottom Line
With the potential for great reward comes higher risk, and this is epitomized by the performance of many of these quantum computing stocks. While some may thrive if the cutting-edge technology takes hold, others may get swept by the wayside. Always take risk into account when investing in more speculative areas of the market, but don’t be afraid to dip your toe into what could be the next big thing.
Data is accurate as of July 26, 2023, and is subject to change.
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