Best Quantum Computing Stocks for 2024
Companies and universities are inching ever closer to producing the world’s first fully functional quantum computer. Many companies are already running prototypes based on diverse techniques and technologies.
The physics and maths that make these machines possible are complicated, as is identifying which companies with quantum computing endeavours are sitting on a solid business case. This article explains what quantum computing entails, lists a few notable quantum computing stocks to watch, and discusses the advantages and disadvantages of investing in companies such as these.
Table of Contents
What is Quantum Computing?
A quantum computer operates on qubits (quantum bits), as opposed to regular bits. Whereas a regular bit can only be either 1 or 0, a qubit can also be everywhere in between, with a certain probability of collapsing to either 1 or 0 whenever it is observed. This property allows quantum computers to run quantum algorithms, which can solve certain well-known problems exponentially faster than regular computers.
One of these problems is integer factorization. It is difficult for regular computers to factorize very large numbers within a reasonable amount of time, a fact on which much of modern cryptography relies. A quantum computer could solve in seconds what might take a regular computer hundreds or thousands of years.
However, the important part to stress is that quantum computers are only faster at computing some problems. Articles with headlines saying that quantum computers are a million times faster than regular computers should be taken with a grain of salt, as that impressive number doesn’t hold for any form of computation in general.
Best Quantum Computing Stocks to Watch
Having covered some basics of what quantum computing entails, it is time for a list of quantum computing stocks to watch. Note that ‘best’ is subjective, and that investors should employ due diligence and perform their own research before making any investment decisions.
However, the list below can provide a good starting point for those wanting to gain more information about quantum computing stocks.
- IBM (IBM) – Cloud-based Quantum Computing as a Service
- Alphabet (GOOG) – 50-Qubit Prototype and Strategic Partnerships
- Microsoft (MSFT) – Developing a Novel Type of Qubit with Lower Error-rate
- IonQ (IONQ.US) – Heavily-funded Quantum Computing Startup with Lasers
- Nvidia (NVDA) – GPU and AI Giant Building Classical/Quantum Hybrid Computers
IBM – Cloud-based Quantum Computing as a Service
‘IBM Osprey’ is the name of IBM’s latest quantum processor, which the company unveiled at the end of 2022. This processor has over 400 qubits, which, according to IBM, makes it capable of things far beyond the reach of classical computers. The company said simulating a computational state on the IBM Osprey with a classical computer would take more bits than there are atoms in the universe.
The company now runs over 20 quantum devices together with a cloud-based online platform called ‘IBM Quantum Lab’. These devices can be used to run quantum algorithms and experiments, and also simulate what might be possible with larger quantum computers in the future. Six of the 20 devices are available for public use.
Its plans for monetizing its innovation within the realm of quantum computing are clear: its cloud-based platform is already being used by Fortune 500 companies like Goldman Sachs, Capgemini, and Boeing. IBM’s technology empowers these companies to use quantum computing to improve their business processes. Premium plan clients receive access to IBM’s most powerful systems, hands-on support, and training.
Alphabet – 50-Qubit Prototype and Strategic Partnerships
Google is one of the world’s leading companies in the area of quantum computing. The company is most known for its popular search engine but also performs cutting-edge research in fields like AI, algorithmics, robotics, and quantum computing. In 2019, the company came out with Sycamore, a quantum processor with around 50 qubits.
Since then, the company has been tirelessly working on improving its system and using it to run experiments with the aim of better understanding complex topics like traversable wormhole dynamics. In 2019, the quantum team at Google reported that Sycamore was able to perform a calculation in 200 seconds, which would take a regular supercomputer over 10,000 years to perform. Competitor IBM later said it was sceptical of the claim, stating that a regular supercomputer could perform the same calculation in a couple of days.
Google has partnered with finance giant J.P. Morgan to develop quantum algorithms for portfolio optimization, risk analysis, and fraud detection. The goal is to devise algorithms that outperform those that run on classical computers in both time and accuracy. Similarly, Google has partnered with Airbus to develop quantum algorithms to optimize flight scheduling and routing, among other things.
Microsoft – Developing a Novel Type of Qubit with Lower Error-rate
For some time, it was unclear whether computer giant Microsoft had any real plans to join the quantum computing arms race. Then, in early 2022, the company posted a blog post detailing how it had successfully demonstrated the physics required for building topological qubits. Topological qubits are used to build a topological quantum computer, which works differently from the types of quantum computers IBM and Google are working on.
A topological quantum computer isn’t inherently more powerful than a ‘regular’ quantum computer, but it has one major advantage: it is much less prone to producing errors. The error rate of current quantum computers is around one error per thousand calculations, which is still too high to be practical. Computer scientists believe a quantum computer needs to produce less than one error per one million computations before it can truly become useful.
So while Microsoft hasn’t been boasting about the number of qubits on its devices, it might be leading the way to the first truly functional quantum computer. Especially so since another advantage of topological qubits is that they take up very little space, and one can easily fill a small chip with thousands or even millions of them. Something that, according to Microsoft’s researchers, will be necessary before quantum computers can start tackling the real-world issues we cannot solve with classical computers.
IonQ – Heavily-funded Quantum Computing Startup with Lasers
Established in 2015, IonQ is the brainchild of two professors from the University of Maryland and Duke University, both of whom have over 25 years of research experience in the field of quantum computing technology. They have run several series of investment rounds in the years since, landing a $20 million cash injection from GV, Google’s venture capital arm. In total, they have received around $400 million in investments so far.
Such impressive fundraising naturally piques investors' interest, so what is their edge? The company is actively researching and building a so-called trapped ion quantum computer. This type of quantum computer works by storing qubits on ions that are trapped in an electric field. Lasers are used to manipulate the ions into either a charged or uncharged state. As with all things in quantum computing, it involves a lot of complicated maths and physics.
The important thing to know is that the trapped ion quantum computer is seen as one of the promising ways of building a quantum computer that is large enough to perform meaningful calculations. The advantages of this technique are that the qubits are relatively stable for a long time and that there are comparatively few errors. In this sub-niche of quantum computing, IonQ is at the forefront of development.
NVIDIA – GPU and AI Giant Building Classical/Quantum Hybrid Computers
NVIDIA has certainly been in the limelight in the first half of 2023, as its stock price has more than tripled in a period of six months. Much of this price action has been attributed to the growing hype around AI, an area of computing that got the interest of NVIDIA, as it is one of the leading GPU-producing firms in the world.
But the company also has a quantum computing initiative, for which it has earned itself a spot on this list. Perhaps to no surprise, NVIDIA has been working on combining quantum processing units with its own highly advanced GPUs and CPUs to create a hybrid computer capable of processing certain types of data and running certain algorithms much faster than a classical computer can.
NVIDIA doesn’t currently seem to have any ambition to build a quantum computer of their own, but their strategic partnerships with many companies in the quantum computing space, like Anyon Systems, Atom Computing, and IonQ, among others, means they will be positioned at the forefront of the technological developments in this field. This, combined with their own expertise in GPUs and AI, could lead to interesting things in the future.
How to Invest in Quantum Computing Stocks
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Why Invest in Quantum Computing?
The technology is promising, to say the least, and the applications are myriad. But it is important to note that a quantum computer only solves some specific problems faster than a regular computer. There are many everyday computations that quantum computers will not be able to speed up, as far as we know. The notion that quantum computers will take the world by storm like regular computers and the internet did, is therefore viewed with scepticism by some.
Another large challenge for quantum computing is that qubits need to be kept extremely cold in order to function, namely -273 degrees Celsius. Temperatures such as these are too extreme to be achievable using household appliances, so while quantum computers will likely be built and used in large facilities in the (near) future, they are less likely to become everyday items consumers might have in their homes.
So then, what are the upsides? It has been hard to miss the recent developments within the world of Artificial Intelligence, with chatbots like ChatGPT being able to form detailed, human-like responses. Quantum computing can speed up machine learning algorithms, which are the algorithms used to ‘train’ these AIs. The first company to be able to run a full quantum computer and combine it with machine learning algorithms could make important technological breakthroughs. But this is only an example; many fields and sectors would see advancements thanks to the kinds of calculations only quantum computers can perform.
For a quantum computing stock to be of interest to investors, the company needs to achieve two things: first, build a quantum computer, and second, have a plan to generate revenue. So far, companies working on quantum computing are still stuck on the first part, which seems to be where the greatest challenges lie. Time will tell whether investing in these companies is going to pay dividends in the long run, as a fully functional quantum computer is still some years away at the very least.
FAQs on Quantum Computing Stocks
Who are the leaders in quantum computing stocks?
There are several proposed methods of building a fully functional quantum computer. Whether that be the trapped ion quantum computer IonQ is building or, for example, the topological quantum computer Microsoft is working on. Both these companies, along with IBM and Google, are serious competitors and candidates as the information technology sector moves closer to the holy grail, which is a fully functional quantum computer. From an investment perspective, quantum computing is still in its early days, and it will likely take years before such a device exists and can be used to turn a profit.
Is quantum computing stock a good buy?
The field of quantum computing is still in its infancy. Today’s prototypes are small and error-prone. Making larger quantum computers is difficult, as qubits require very specific environments and setups that are expensive and difficult to scale. The key takeaway for investors here is that it could take many more years before quantum computers truly become viable and companies can start using them to earn revenue. Investors looking to add quantum computing stocks to their portfolio should remain aware of this fact.
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