The hot field of quantum computing catapulted the stocks of several companies in the space. Examples include IonQ (NYSE: IONQ) and D-Wave Quantum (NYSE: QBTS). The former’s share price is up over 400% and the latter more than 1,000% in the last year through the week ending Aug. 29.
But of the businesses racing to produce quantum computers capable of adoption beyond research circles, Nvidia (NASDAQ: NVDA) stands out. Several factors contribute to its position as a top quantum computing stock to consider right now.
Why Nvidia is a compelling quantum computer stock
Nvidia is known as the artificial intelligence (AI) semiconductor chip leader. But as it looks toward the future, the company is working to evolve its tech for the quantum era. For example, it’s developing a core processing unit that works in a quantum computer.
In addition, Nvidia is opening a research center that will house “the most powerful hardware ever deployed for quantum computing applications,” according to the company. The center aims to solve challenges inherent in quantum devices, such as their propensity to make computational mistakes.
Beyond its tech, another factor making Nvidia a compelling quantum computer stock is the company’s outstanding financial health. While IonQ and D-Wave aren’t profitable, Nvidia’s net income was US$26.4 billion in its fiscal second quarter (ended July 27), a 59% increase over the previous year. It also generated US$13.5 billion in Q2 free cash flow, providing funds to invest in quantum technology.
Moreover, Nvidia shares possess a superior valuation among quantum computer stocks such as IonQ and D-Wave. This can be seen in the price-to-sales (P/S) ratio of the companies.
Data by YCharts.
The chart shows that IonQ and D-Wave’s sales multiples skyrocketed over the last year, making Nvidia the lowest among the trio by a wide margin. This suggests IonQ and D-Wave stocks are overpriced.
With its better valuation, technological advancements, and strong financial standing, Nvidia emerges as an attractive investment in quantum computing.
