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Quantum computing investing isn’t at the forefront of most investors’ minds right now. Artificial intelligence (AI) investing is. However, that makes it the perfect time to consider scooping up shares of companies involved in quantum computing, as you don’t have to pay the premium that these stocks get priced with when the hype cycle swings in the positive direction.
There are three quantum computing stocks that I’m excited about over the long term, and some of them are benefiting from AI tailwinds right now. I think that makes them smart investments, and if you’re looking to increase your exposure to quantum computing before it arrives over the next few years, I think these three are genius buys.
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Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) is one of the legacy tech companies pursuing quantum computing. It makes a ton of sense, as it has to use other companies’ products for traditional computing units, but if it can develop a quantum computing unit in-house, it can boost its margins. Undoubtedly, Alphabet would monetize this product through its cloud computing division, allowing users to access either traditional or quantum computing power. That could unlock a new growth wave for Google Cloud, but it doesn’t really need it right now.
AI demand is massive, causing Google Cloud’s revenue growth rate to spike to 82% year over year. With Alphabet spending around US$200 billion on data center capital expenditures this year, it will likely accelerate this growth rate for the foreseeable future as it burns through a US$514 billion backlog.
On the quantum front, Alphabet has been relatively quiet lately, but it’s undoubtedly pushing the limits of what its Willow quantum computing chip can do. At one of the last updates investors received from Alphabet, it had just developed a quantum algorithm that provided a verifiable advantage over traditional computing methods.
They’re likely pushing the limits of what’s possible, and I’m still bullish on Alphabet to develop a viable quantum computing unit, as it has nearly unlimited resources to do so.
IonQ
A smaller player in the quantum arms race is IonQ (NYSE: IONQ). IonQ is taking a different approach than most by deploying a different quantum computing technique known as trapped ion. This has advantages and disadvantages, with the primary benefit being improved accuracy and the drawback being processing speed. With quantum computing accuracy being a huge roadblock, having the most accurate technology possible is a big win for IonQ.
We’ll see how this pans out over the long term, but it has a blueprint to produce a 10,000-qubit computer, well above the threshold of what’s required for commercial feasibility. IonQ is more of a long-shot investment, but with its small size, if it pans out, it will be a huge winner for investors.
Nvidia
Last is Nvidia (NASDAQ: NVDA), which is a giant in the traditional computing space. Nvidia has no plans to develop a quantum processing unit. Still, it is doing everything it can to ensure that its traditional computing units can be used alongside quantum units in a hybrid computing approach. To support this, Nvidia has done several things, like develop an AI model to help with quantum error correction, adapt its CUDA software to quantum computing processes, and produce the NVQLink, which allows quantum processing units from various companies to plug into existing computing infrastructure.
These products will ensure Nvidia’s GPUs remain the gold standard for traditional computing units. If the future is a hybrid approach, then Nvidia will stand to benefit as quantum computing rolls out. With Nvidia also benefiting from a massive demand wave in the AI sector, it’s a great stock pick from that perspective, too.
