These 2 Quantum Computing Stocks Will Soar Over the Next 5 Years
Quantum computing is often considered the next big technology investment trend after the artificial intelligence (AI) race is over. AI spending is expected to continue until at least 2030; This is the year in which quantum computing technology is expected to reach commercial viability. But if you wait until 2030 to start investing in quantum computing, most of the gains will be gone anyway.
Although investing in early-stage quantum computing companies is inherently risky, I think investors should allocate a small portion of their portfolio (e.g. 1% to 3%) to this emerging technology, as the gains that can be made from this sector are huge.
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Quantum computing is not expected to exist in a vacuum. The most widely accepted future for this technology is to operate in a hybrid computing environment where existing accelerated computing infrastructure (such as those built for artificial intelligence) is used in conjunction with quantum computing.
By combining these two technologies, users expect to unlock never-before-experienced capabilities. This includes AI training and inference, logistics network and supply chain optimization, statistical analysis and weather modelling. Quantum computing will likely strengthen our current capabilities and significantly improve our current computing infrastructure.
Consulting firm McKinsey & Company estimates that the total quantum computing market opportunity could be as high as $72 billion annually by 2035. This is a huge market expected to emerge over the next decade and makes investing in this market very simple for anyone with a long-term investment horizon.
Since the quantum computing opportunity is predicted to be huge, it should come as no surprise to investors that legacy technology companies are competing with much smaller companies to become the preferred supplier of quantum computing devices. Although these large companies are safer investment options, their upside is quite limited. If you’re already invested in AI, there’s a good chance you own shares of companies like: Nvidia(NASDAQ:NVDA), Alphabet(NASDAQ:GOOG)(NASDAQ:GOOGL)And Microsoft(NASDAQ:MSFT)they are all investing in quantum computing capabilities.
My two favorite quantum computing stocks that I think will take off over the next few years are: ionQ(NYSE:IONQ) And D-Wave Quantum(NYSE: QBTS). Both of these companies are taking different approaches to the field of quantum computing, and both can improve.
IonQ’s approach uses a new technique known as ion trapping and delivers results with superior accuracy. This has allowed IonQ to stay at the forefront of the quantum computing race and has made many investors incredibly bullish on the stock. It’s safe to say things are going pretty well for IonQ, with revenue up 429% year over year in the latest quarter and IonQ holding the world record for most accurate quantum computer. Just because he’s the leader now doesn’t mean he can’t stumble. But it’s the best option investors have right now.
D-Wave Quantum is not focused on building a general-purpose quantum computer like IonQ. Instead, he opts for a more specialized approach using quantum annealing. Quantum annealing looks for the lowest energy state in the system and identifies this as the optimal solution. Optimization problems constitute the majority of tasks that quantum computing is expected to improve; Therefore, D-Wave’s focused approach to this sector may give it a leg up on the competition in some areas.
Although there is no guarantee of success with these two, these are the products I currently prefer most in this field. By keeping exposure to these stocks low, you can balance the risk-reward profile through position sizing. Time will tell how these two will pan out, but I think they’re worth the investment.
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Keithen Drury He has positions in Alphabet, IonQ, Microsoft and Nvidia. The Motley Fool has positions in and recommends Alphabet, IonQ, Microsoft and Nvidia. The Motley Fool has a feature disclosure policy.
