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By Alex Sirois, InvestorPlace Contributor
Quantum computing stocks have emerged as one of the growth sectors of late 2023. Quantum computers have been in development for several decades and the field is continuing to progress. Its promises are great. It essentially leverages quantum mechanics to allow faster problem solving than is possible on classical computers.
Quantum computing’s practical applications today remain limited. However, the tech promises to speed the development of machine learning and artificial intelligence (AI) which is one of the reasons that it is garnering a lot of attention at the moment. The further development of those applications has the potential to multiply investor capital.
IonQ (IONQ)
IonQ (NYSE:IONQ) is one of the leading names in the quantum computing space. The stock became publicly available in 2021 via a SPAC merger. IonQ was the first pure-play quantum computing company to become publicly available to investors. Given that quantum computing remains in its nascent stages, IonQ is going to remain at the center of all conversations on the topic.
One of the leading reasons to consider investing in IonQ is that all three of the major cloud providers have formed partnerships with the company. IonQ’s Aria quantum computer is available through Amazon (NASDAQ:AMZN) AWS’ quantum computing service called Braket. At launch, the service was available for 15 hours daily. It allows users to undertake highly technical work including the testing of quantum circuits, for example.
Likewise, Microsoft (NASDAQ:MSFT) has published information relating to its partnership with IonQ as it relates to the company’s Azure cloud offerings. Google has done the same. Quantum computing remains a very early technology, but IonQ’s strong relationships across the cloud space provide enough reason for investors to consider it.
Google (GOOG,GOOGL)
Google (NASDAQ:GOOG,GOOGL) is a massive technology company with a massive footprint that spans a variety of fields. Included among them, quantum computing. Its stock is almost always a reasonable choice for investors and for those interested in quantum computing Google also makes sense.
I should also caveat that GOOG shares realistically won’t 10X in value without a very long timeline. The company is simply too large. It is forecast to perhaps 3X by 2025. If, in the future, Alphabet decides to spin off a quantum computing division as a stand alone stock that would be a different story. For now, understand that Google’s quantum computing efforts are but one more reason to consider investing overall.
The company has developed a Quantum Artificial Intelligence Lab. That lab was developed and is operated jointly with NASA and the Universities Space Research Association. The project is essentially an open source library with multiple applications across fields that touch on quantum computing. It includes Cirq, a library that leverages python computer language and Quantum Computing for the purpose of creating quantum circuits. Further, it includes other software that allows for the development of things like quantum chemistry and the application of quantum Computing to Fields including machine learning that are very important today.
That said, Google isn’t focusing strictly on the software side and also has quantum computing hardware available.
IBM (IBM)
IBM (NYSE:IBM) currently offers quantum computing services primarily through its New York data center. The data center is the headquarters of IBM’s quantum computing services and provides users access to the majority of its services. That said, IBM is scheduled to complete its second global data center in 2024.
The company’s EU global data center will be located in Ehningen, Germany. IBM boasts more than 10 utility scale Quantum systems globally at present. Quantum systems are modular and can be extended and can connect multiple systems for greater power.
For example, in 2021 IBM installed one of its Quantum systems at the Cleveland Clinic. That kicked off the beginning of a 10-year relationship in which IBM will help leverage its technological know-how to solve problems in healthcare. That installation should also serve to inform investors of just how wide-ranging Quantum computing is in its applications. Essentially, it’s all about the ability to access greater volumes of data at higher speeds. That’s the promise of quantum computing and it’s certainly very applicable in data rich fields such as healthcare. Investors should note that IBM is a larger company and thus its chances to 10X are therefore lower than IonQ, for example.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) is one of the leading tech firms and stocks available today. The company has absolutely exploded in 2023 thanks to its leading edge h100 chips that are in high demand for all applications related to artificial intelligence. 2024 should be no different given that Nvidia will release its successor to the h100, the h200. It promises to again be the strongest available chip for artificial intelligence purposes and to propel Nvidia to even higher heights.
That said, Nvidia is also highly involved in the field of quantum computing. Primarily, Nvidia has worked to create quantum circuit simulations called cuQuantum. The company reports that cuQuantum is capable of simulating ideal and noisy qubits at a scale and speed that was previously impossible.
Leading scientific laboratories (as well as those at IBM and Google) utilize Nvidia’s cuQuantum. Nvidia’s ability to successfully simulate quantum computing in relation to qubits is yet another reason to consider investing in the company. Nvidia is one of the most highly valued firms on the planet currently. Thus, its path to 10X is more difficult, and frankly unlikely without a long-term investment horizon. However, projections suggest it could quadruple in value by 2035, which would put it on its way.
FormFactor (FORM)
FormFactor (NASDAQ:FORM) is an interesting stock to consider at the moment. the company primarily operates in the semiconductor industry. Form factor is first and foremost a manufacturer of semiconductor testing equipment. It sells that equipment to firms within the industry and generally could be expected to do well in 2024 as macroeconomic pressures ease. Those factors could lead to a situation in which demand throughout the semiconductor sector increases benefiting FormFactor.
While FormFactor is primarily a chip company, it also has a strong connection to the quantum computing industry. The company sells cryogenic systems which are integral to the overall manufacture of quantum computers.
Thus, investors should look at the company for a few factors that could propel it higher in 2024. Cryogenic systems could see greater demand overall in relation to quantum computing which would potentially propel its shares higher. Further, the general macroeconomic environment is easing or at least showing potential signs thereof. Lower lending costs have the potential to increase demand for chips and testing equipment required for those chips.
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D-Wave Quantum (QBTS)
D-Wave Quantum (NYSE:QBTS) is one of the smaller and lesser known companies in the quantum computing space. Nevertheless, it remains one to keep track of and offers substantial potential and cheap exposure with shares that are priced under a dollar.
The company is trying to establish its brand as one that is well aligned with enterprise applications for quantum computing. In that regard the company did well during the third quarter, signing an agreement with the large financial services firm BBVA. The company signed a number of other partnership agreements during the period which suggests that it does indeed have real enterprise demand.
The company increased its revenue by 51% during the third quarter, reaching $2.6 million. That said, the company’s net loss increased from $13.3 million to $15.8 million in the third quarter. the company does produce profits by GAAP standards but continues to report net losses.
The company noted that it made progress on its development of high coherence qubits. High coherence qubits are those that are capable of quantum computations for a longer period of time without errors.
Arqit Quantum (ARQQ)
Arqit Quantum (NASDAQ:ARQQ) is another quantum computing stock for those with a substantial appetite for risk. The company is primarily focused on the application of quantum computing for the purposes of cybersecurity. Shares trade for less than 50 cents which should give readers an indication of the risk involved. The company doesn’t have much analyst coverage so it’s very difficult to gauge where it may be going.
The company’s lead product is called QuantumCloud which provides security through quantum encryption. That product relies on something called Quantum cryptography which purports to be unhackable. Essentially, quantum cryptography promises to increase security levels based on the application of physics related principles as opposed to mathematical principles used in traditional cryptography.
Investing in the stock is clearly quite risky at the moment. The company has enacted a pivot that has thus far been unsuccessful. Previously the company relied on direct enterprise sales for its QuantumCloud product. That led to $7.2 million in revenues in all of fiscal year 2022. Beginning on Jan. 1 it switched to a platform as a service offering for QuantumCloud. Revenues have fallen below one million through the first nine months of 2023. The company has announced new channel Partnerships but none of it is producing significant fundamental improvements yet. none of the signs point to any strong reason to consider the company at this time but it has the potential to improve rapidly which is why it finds itself on this list.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Alex Sirois is a freelance contributor to InvestorPlace whose personal stock investing style is focused on long-term, buy-and-hold, wealth-building stock picks. Having worked in several industries from e-commerce to translation to education and utilizing his MBA from George Washington University, he brings a diverse set of skills through which he filters his writing.
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