Quantum computing, which promises to exponentially increase computer speeds, is still in nascent stages, reminiscent of artificial intelligence (AI) a few years ago. However, that does not deter forward-looking investors from seeking out the next potential technological revolution and aligning their portfolios accordingly. Here, we present three promising quantum computing stocks that merit attention.
Utilizing quantum mechanics principles, quantum computing could revolutionize computational speeds, accelerating them by millions or even billions of times. Although not yet commercially viable, the landscape appears ripe with opportunities as more companies enter the race, aiming to harness quantum computing’s potential.
For this analysis, the main criterion was the companies’ investment in research and development (R&D). The companies demonstrating a willingness to invest heavily in R&D were prioritized, suggesting a proactive approach to tapping into quantum computing’s potential.
A household name and tech giant, Amazon.com (NASDAQ:AMZN), is continuously evolving beyond its initial e-commerce model. Its extended ventures into technology solutions, such as Amazon Web Services and Braket Direct, have been successful.
Braket Direct offers researchers and software developers access to quantum computing technology. Furthermore, Amazon unveiled a quantum computing chip that can significantly reduce computational errors—a huge stride in making quantum computing more viable.
Amazon’s hefty R&D allocation, termed “Technology and infrastructure” in its financials, amounted to $85.62 billion in FY’23, constituting 14.89% of its total revenue. With a substantial growth in operating cash flow from $46.75 billion to $84.95 billion, the company possesses ample resources to fund its quantum computing endeavors, making Amazon a compelling quantum stock to consider.
Another tech titan making significant strides in quantum computing is Alphabet (NASDAQ:GOOGL). The creators of the Gemini AI have an exciting story unfolding in the realm of quantum computing.
Sycamore, a quantum processor developed by Google’s AI division, leapfrogged contemporary technology by completing a task in 200 seconds, which would otherwise take a whopping 10,000 years on a conventional supercomputer. In 2023, they achieved a significant milestone by reducing logical qubit error rates to 10-2.
Alphabet’s initiative – XPRIZE, a global competition for developing quantum computing algorithms is another testament to its commitment. With the ambition to build a one million-qubit supercomputer, Alphabet demonstrates a strong commitment to hastening the quantum computer era. The company spent $45.43 billion on R&D in 2023—14.77% of its revenue, signaling its keen interest in the field.
International Business Machines Corp (NYSE:IBM) is another notable player in the quantum computing race. Best known for its hardware and software solutions, IBM has a well-established footing in the quantum computing domain.
In 2023, IBM published a research paper claiming a significant increase in the efficiency of quantum error-correcting codes. The company’s partnership with institutions like Rensselaer Polytechnic Institute and the University of Melbourne illustrate its commitment to quantum computing education and research.
IBM allocated approximately 11.31% of its 2023 revenue to R&D, denoting a serious commitment to the field. In the same period, IBM’s cash flow saw a significant rise, from $10.43 billion to $19.93 billion.
Investors should note that the quantum computing sector’s potential rewards come with their risks. Yet, as the sector matures, companies like Amazon, Alphabet, and IBM with their considerable investment in R&D, continue to pave the way, making them attractive quantum stocks to consider for forward-thinking investors.
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