Quantum computing has been turning heads in the investment world, much like artificial intelligence (AI) has done and continues to do. The reason? Both of these areas could be game changing for businesses and our daily lives — for example, these technologies could result in the development of life-saving drugs, may streamline factory operations, and help you organize your daily tasks.
All of this may result in supercharged earnings growth for the companies leading the way. AI and quantum computing are complementary but different: AI involves the training of large language models (LLMs) so that they can go on to solve complex problems. Quantum computing harnesses the behavior of subatomic particles — and their ability to scale exponentially — to solve problems that are impossible for classical computers to handle.
Both technologies are in their early days of growth, though AI already is being applied to real-world problems and generating major revenue for companies — quantum computing may take several years before becoming generally useful, some experts have predicted. But the fact that quantum is just getting started is great news for investors because it offers us plenty of time to get in on these stocks and benefit from their full growth story. And at the same time, you can minimize risk by investing in companies that already have proven themselves in other areas and are profitable.
With this in mind, here are my top two quantum computing stocks to buy now.
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1. Alphabet
Alphabet (GOOG 1.47%) (GOOGL 1.46%) is mainly known for its Google platform — from the world’s most popular search engine Google Search to cloud computing unit Google Cloud. Together, these businesses have helped the company generate billions of dollars in revenue over the years. And what’s also compelling is that Alphabet has understood how to invest in its business, resulting in gains in return on invested capital too.
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This company continues to excel in its markets and has invested in AI — applying the technology to its business and selling AI tools to others. On top of this, Alphabet aims to win in quantum computing as well, and might be on the right track to do so.
Late last year, the company announced Willow, its quantum chip that already has accomplished two big things. It’s shown that it can reduce errors when scaling up with more qubits, or the particles that process data — this is a big deal, since errors have been a big problem with quantum systems. And second, it performed a computation in a few minutes that would have been impossible for even the most sophisticated supercomputer. Alphabet says the Willow generation of chips may help quantum computing become generally useful — reaching a huge milestone.
Considering Alphabet’s solid, profitable business and progress in quantum computing, it’s a no-brainer buy at the dirt cheap price of 18x forward earnings estimates.
2. Nvidia
You may think mainly of AI when you think of Nvidia (NVDA 0.53%) — and that’s right. The company dominates the AI chip market and sells a full portfolio of related elements that have been driving enormous revenue growth. In the latest fiscal year, Nvidia’s revenue surged 114% to $130 billion, a record, thanks to this focus on AI.
But Nvidia also may benefit from the quantum computing market too — and it may not have to wait very long. This is because Nvidia’s computing platforms can be used now to help tackle problems facing quantum computing, such as error correction, and help develop hybrid AI/quantum systems. To get the ball rolling, Nvidia recently announced it’s building an accelerated quantum computing research center in Boston, to open later this year.
All this means that Nvidia, which has been flying high thanks to soaring AI-driven revenue, also may see itself generating growth as quantum computing develops, and then if and when it reaches the general use stage.
Meanwhile, as an investor, you don’t face significant risk, since Nvidia already is highly profitable thanks to its AI business and also generates revenue by selling its chips to gaming, robotics, and professional visualization customers.
So, by investing in Nvidia, you’re betting on an established company that’s delivered big results — and at the same time, you’re positioning yourself for a potential quantum computing win too.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.
