Quantum computing stocks could be just as profitable an investment as stocks benefiting from the AI boom.
Quantum computing is a fast-growing field of advanced computing technology with the ability to surpass the computational power of generative artificial intelligence (AI). Generative AI gained traction early last year with the release of ChatGPT by OpenAI. Many companies are now looking to leverage large language models (LLMs) to build their own generative AI tools or products. While everyone seems to be focused on artificial intelligence right now, quantum computing could bring about computational efficiencies and capabilities never before thought possible. Unlike classical computers, quantum computers leverage quantum mechanics to perform advanced calculations, from optimization analysis to weather forecasting. For investors looking for promising opportunities, there are a number of quantum computing stocks to buy now that could benefit from advancements in the field.
There are many companies that specialize in quantum computing, but only a handful are worth considering as investments. Additionally, for a safer bet on quantum computing, investors can look to the big tech companies that have been investing in the space for years.
Here are three quantum computing stocks to buy in the third quarter.
Ion Q
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One quantum computing stock that has taken a big hit in the market this year is quantum computing specialist IonQ (NYSE:IONQ). In fact, according to Koyfin, IONQ shares have plummeted about 31% year-to-date as of Wednesday’s close. This is in stark contrast to the bull run IONQ has experienced in 2023, when quantum computing stocks soared 198% for the year. This is mainly due to the AI ”boom” that has been stoking the market since the beginning of 2023 seeping into other new industries. As we discussed in our previous article on IonQ, the company utilizes a trapped ion system that traps barium or ytterbium ions in an electromagnetic field, allowing their power to be manipulated and utilized for quantum computing. IonQ’s latest quantum computer is the Aria quantum system, which has 25 qubits.
The company’s first-quarter results beat Wall Street expectations, and its guidance also gave investors hope. I was previously bearish on the stock, but IonQ shares are likely to recover as the market continues to benefit from the AI boom and favorable macroeconomic factors.
Nvidia (NVDA)
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Shares of AI chipmaker Nvidia (NASDAQ:NVDA) fell hard on Wednesday. News that the U.S. is considering imposing comprehensive new tariffs on semiconductors and the growing likelihood that Trump will be re-elected as president led to sharp declines in shares of major chipmakers with significant exposure to Asia and the region. Nvidia in particular was down 6.6% by the close of trading on Wednesday. After all, with new tariffs unlikely with just a few months until the election, investors should view the decline as an opportunity to buy into the giant chipmaker.
Beyond its AI accelerator chips, Nvidia has been investing in quantum computing technology for some time now. CUDA-Q is Nvidia’s developer software toolkit that allows quantum computing developers to better program quantum hardware. Since the late 2000s, Nvidia’s software toolkit, CUDA, has helped chipmakers make their graphics chips perform better than their competitors. A quantum version of CUDA could give Nvidia an edge in the quantum computing space.
International Business Machines (IBM)
The final quantum computing stock to consider is International Business Machines (NYSE:IBM). The stock is up 16.8% year to date, but its valuation remains reasonable, trading at just 19.1 times forward earnings. IBM has been researching and developing quantum computers since the early 2000s, and it seems to produce better iterations of quantum computers every few years. In December 2023, IBM unveiled the Quantum System Two, a supercomputer located in Yorktown Heights, New York. This quantum supercomputer is powered by three IBM Heron processors. These processors boast 133 qubits each, the most qubits of any processor to date.
Going forward, IBM will continue to advance the commercial viability of quantum computing systems, and making quantum power available via the IBM Cloud is already a positive step in that direction.
IBM obviously has a lot of technology services business, such as cloud migration and other related professional services, but the company’s investment in quantum computing could pay off big time and contribute significantly to future revenue and profits.
As of the date of publication, Tyrik Torres did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com’s publication guidelines.
As of the publication date, the responsible editor (directly or
We do not indirectly hold any positions in the securities described in this section.
Tyrik Torres has been studying and participating in financial markets since his college days. He is particularly passionate about helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.
