[Editor’s note: “7 Quantum Computing Stocks to Buy for the Next 10 Years” was previously published in August 2020. It has since been updated to include the most relevant information available.]
Quantum computing has long been a concept stuck in the theory phase. Using quantum mechanics to create a class of next-generation quantum computers with nearly unlimited computing power remained out of reach.
But quantum computing is starting to hit its stride. Recent breakthroughs in this emerging field — such as IBM’s (IBM) progressive 100-qubit quantum chip – are powering quantum computing forward. Over the next several years, this space will go from theory to reality. And this transition will spark huge growth in the global quantum computing market.
The investment implication?
It’s time to buy quantum computing stocks.
Quantum Computing’s Transformational Power
At scale, quantum computing will disrupt every industry in the world, from finance to biotechnology, cybersecurity and everything in between.
It will improve the way medicines are developed by simulating molecular processes. It will reduce energy loss in batteries via optimized routing and design, thereby allowing for hyper-efficient electric car batteries. In finance, it will speed up and augment portfolio optimization, risk modeling and derivatives creation. In cybersecurity, it will disrupt the way we go about encryption. It will create superior weather forecasting models, unlock advancements in autonomous vehicle technology and help humans fight climate change.
I’m not kidding when I say quantum computing will change everything.
And as this next-gen computing transforms the world, quantum computing stocks will be big winners over the next decade.
So, with that in mind, here are seven of those stocks to buy for the next 10 years:
Quantum Computing Stocks to Buy: Alphabet
Its Google AI Quantum is built on the back of a state-of-the-art 54-qubit processor dubbed Sycamore. And many consider this to be the leading quantum computing project in the world. Why? This thinking is bolstered mostly by the fact that, in late 2019, Sycamore performed a calculation in 200 seconds that would have taken the world’s most powerful supercomputers 10,000 years to perform.
This achievement led Alphabet to claim that Sycamore had reached quantum supremacy. What does this mean? Well, that’s the point when a quantum computer can perform a task in a relatively short amount of time that no other supercomputer could in any reasonable amount of time.
Many have since debated whether or not Alphabet has indeed reached quantum supremacy.
But that’s somewhat of a moot point.
The reality is that Alphabet has built the world’s leading quantum computer. The engineering surrounding it will only get better. And so will Sycamore’s computing power. And through its Google Cloud business, Alphabet can turn Sycamore into a market-leading quantum-computing-as-a-service business with huge revenues at scale.
To that end, GOOG stock is one of the best quantum computing stocks to buy today for the next 10 years.
International Business Machines
The other “big dog” that closely rivals Alphabet in the quantum computing space is IBM.
IBM has been big in the quantum computing space for years. But Big Blue has attacked this space in a fundamentally different way than its peers.
That is, other quantum computing players like Alphabet have chased quantum supremacy. But IBM has shunned that idea in favor of building on something the company calls the “quantum advantage.”
Ostensibly, the quantum advantage really isn’t too different from quantum supremacy. The former deals with a continuum focused on making quantum computers perform certain tasks faster than traditional computers. The latter deals with a moment focused on making quantum computers permanently faster at all things than traditional computers.
But it’s a philosophical difference with huge implications. By focusing on building the quantum advantage, IBM is specializing its efforts into making quantum computing measurably useful and economic in certain industry verticals for certain tasks.
In so doing, IBM is creating a fairly straightforward go-to-market strategy for its quantum computing services in the long run.
IBM’s realizable, simple, tangible approach makes it one of the most sure-fire quantum computing stocks to buy today for the next 10 years.
Quantum Computing Stocks: Microsoft
Another big tech player in the quantum computing space with promising long-term potential is Microsoft (MSFT).
Microsoft already has a huge infrastructure cloud business, Azure. Building on that foundation, Microsoft has launched Azure Quantum. It’s a quantum computing business with potential to turn into a huge QCaaS business at scale.
Azure Quantum is a secure, stable and open ecosystem, serving as a one-stop shop for quantum computing software and hardware.
The bull thesis here is that Microsoft will lean into its already-huge Azure customer base to cross-sell Azure Quantum. Doing so will give Azure Quantum a big and long runway for widespread early adoption. And that’s the first step in turning Azure Quantum into a huge QCaaS business.
And it helps that Microsoft’s core Azure business is absolutely on fire right now.
Putting it all together, quantum computing is simply one facet of the much broader Microsoft enterprise cloud growth narrative. That narrative will remain robust for the next several years. And it will continue to support further gains in MSFT stock.
The most interesting, smallest and potentially most explosive quantum computing stock on this list is Quantum Computing (QUBT).
And the bull thesis is fairly simple.
Quantum computing will change everything over the next several years. But the hardware is expensive. It likely won’t be ready to deliver measurable benefits at reasonable costs to average customers for several years. So, Quantum Computing is building a portfolio of affordable quantum computing software and apps that deliver quantum computing power. And they can be run on traditional legacy supercomputers.
In so doing, Quantum Computing is hoping to fill the affordability gaps. It aims to become the widespread, low-cost provider of accessible quantum computing software for companies that can’t afford full-scale hardware.
Quantum Computing has begun to commercialize this software, namely with QAmplify, its suite of powerful QPU-expansion software technologies. through three products currently in beta mode. According to William McGann, the company’s chief operating and technology officer:
“The use of our QAmplify algorithm in the 2021 BMW Group Quantum Computing Challenge for vehicle sensor optimization provided proof of performance by expanding the effective capability of the annealer by 20-fold, to 2,888 qubits.”
Quantum Computing’s products will likely start signing up automaker, financial, healthcare and government customers to long-term contracts. Those early signups could be the beginning of thousands for Quantum’s services over the next five to 10 years.
You could really see this company go from zero to several hundred million dollars in revenue in the foreseeable future.
If that happens, QUBT stock — which has a market capitalization of $78 million today — could soar.
Quantum Computing Stocks: Alibaba
Like others in this space, Alibaba’s (BABA) focused on creating a robust QCaaS arm to complement its already-huge infrastructure-as-a-service business.
In short, Alibaba is the leading public cloud provider in China. Indeed, Alibaba Cloud owns about 10% of the global IaaS market. Alibaba intends to leverage this leadership position to cross-sell quantum computing services to its huge existing client base. And eventually, it hopes to become the largest QCaaS player in China, too.
Will it work?
The Great Tech Wall of China will prevent many on this list from participating in or reaching scale in China. Alibaba does have some in-country quantum computing competition. But this isn’t a winner-take-all market. And given Alibaba’s enormous resource advantages, it’s highly likely that it becomes a top player in China’s quantum computing market.
That’s just another reason to buy and hold BABA stock for the long haul.
The other big Chinese tech company diving head-first into quantum computing is Baidu (BIDU).
The company launched its own quantum computing research center in 2018. According to its website, the goal of this research center is to integrate quantum computing into Baidu’s core businesses.
If so, that means Baidu’s goal for quantum computing diverges from the norm. Others in this space want to build out quantum computing power to sell it as a service to third parties. Baidu wants to build out quantum computing power to, at least initially, improve its own operations.
Doing so will pay off in a big way for the company.
Baidu’s core search and advertising businesses could markedly improve with quantum computing. Advancements in computing power could dramatically improve its search algorithms and ad-targeting techniques and power its profits higher.
And thanks to its early research into quantum computing, BIDU stock does have healthy upside.
Quantum Computing Stocks: Intel
Last — but not least — on this list of quantum computing stocks to buy is Intel (INTC).
Intel may be falling behind competitors — namely Advanced Micro Devices (AMD) — on the traditional CPU front. But the semiconductor giant is on the cutting edge of creating potential quantum CPU candidates.
Intel’s newly announced Horse Ridge cryogenic control chip is widely considered the market’s best quantum CPU candidate out there today. The chip includes four radio frequency channels that can control 128 qubits. That’s more than double Tangle Lake, Intel’s predecessor quantum CPU.
The big idea, of course, is that when quantum computers are built at scale, they will likely be built on Intel’s quantum CPUs.
Therefore, potentially explosive growth in the quantum computing hardware market over the next five to 10 years represents a huge, albeit speculative, growth catalyst for both Intel and INTC stock.
On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.