As investors have seen with the upward surge of artificial intelligence, data center and cloud computing stocks, there’s an ever-growing need for processing power.
One area that investors may be overlooking is quantum computing. Quantum computing performs calculations much faster than current computer technology, making it a powerful tool for solving complex problems.
According to an April report from consulting firm McKinsey, the chemicals, life sciences, finance and mobility industries are poised to see the earliest impact from quantum computing and could gain up to $2 trillion in the next 11 years.
A 2022 McKinsey report found that funding of startup companies focused on quantum technologies more than doubled to $1.4 billion in 2021 from 2020.
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“Even with this strong growth, quantum computing is still in its infancy, and much more investment is needed in the research and development of the technology,” says Jon DuPrau, managing partner at Quantum Portfolio Management in New York.
“We believe that companies will be more likely to invest in quantum computing when they see the efficiency from artificial intelligence,” DuPrau adds. “The data storage and cloud computing needs are likely to increase dramatically in the next several years, thereby drawing more companies into the quantum computing space.”
Here are some companies, small and large, well-known and little-known, with potential to benefit from further investment in quantum computing:
| Quantum computing stock | YTD return as of July 12 |
| Honeywell International Inc. (ticker: HON) | 3.7% |
| Microsoft Corp. (MSFT) | 21.4% |
| FormFactor Inc. (FORM) | 43.0% |
| IonQ Inc. (IONQ) | -31.8% |
| International Business Machines Corp. (IBM) | 13.9% |
| Alphabet Inc. (GOOG, GOOGL) | 32.7% |
| Nvidia Corp. (NVDA) | 161.0% |
Honeywell International Inc. (HON)
Investors may think of Honeywell as an old-line manufacturing company. It’s tracked in the Standard & Poor’s industrials sector, and is not typically among the index’s fastest movers.
However, Honeywell has teamed up with Cambridge Quantum to form Quantinuum, a U.K.-based quantum computing company. Its goal is to integrate quantum information systems into a wide range of industries, including pharmaceuticals, chemicals, finance, aerospace and defense, oil and gas, data centers, manufacturing and telecommunications.
In addition, Honeywell’s System Model H1 quantum computer is available for enterprise users.
Microsoft Corp. (MSFT)
The largest company in the S&P 500 seems to be involved in just about everything in the information technology world. Microsoft’s cloud platform, Azure, offers quantum capabilities for research in areas such as environmental sciences, agriculture, health, energy, climate and materials.
Microsoft also provides extensive educational resources for organizations seeking to optimize the power of quantum computing.
In April, Microsoft and Honeywell-backed Quantinuum said they had developed algorithms to reduce quantum computing errors, a step toward further commercialization of the technology.
FormFactor Inc. (FORM)
Semiconductor gear maker FormFactor has been around for a while, having gone public in 2003. The stock is trading just below its July 8 high of $63.63.
One small area of the company’s business is cryogenic systems. A major challenge in commercializing quantum computers is maintaining the low temperatures currently required for the components to function properly. FormFactor’s line of refrigerators is designed to support the low temperatures needed to conduct research using quantum computers.
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IonQ Inc. (IONQ)
With a market capitalization of around $1.8 billion, Maryland-based IonQ falls into the small-cap category. The company develops and commercializes quantum computers.
“IonQ is interesting because it is the closest to providing a product that operates at room temperature, a huge competitive advantage,” says James Lee, founder of StratFi in Wilmington, Delaware.
IonQ went public in 2021; like some other stocks that have made big upside moves in their first few years of going public, the company is not yet profitable.
International Business Machines Corp. (IBM)
The tech services giant operates a quantum computing and programming model called Qiskit Runtime. Partners in IBM’s Quantum Network include academic institutions and other researchers focusing on areas such as cybersecurity and green energy.
IBM, like other Big Techs, is in the early stages of developing its quantum computing capabilities, and it’s not likely this line of business will be a big growth driver in the near term. However, the company recently partnered with Rensselaer Polytechnic Institute in Troy, New York, on a quantum computing system that it hopes will showcase the technology’s capabilities.
Like Microsoft, Alphabet is a large tech company that has a prominent role in cutting-edge innovations.
Alphabet, better known by the name of its subsidiary Google, has been developing its own line of chips for AI and other cloud-computing applications, and includes quantum computing chips in its portfolio.
Google is sponsoring a $5 million global XPrize competition to develop quantum computing algorithms to solve current problems in areas including climate, sustainability and health.
Nvidia Corp. (NVDA)
Nvidia has become a juggernaut stock on the strength of its AI chips, and it’s also putting resources behind quantum computing applications.
Nvidia has the advantage of using the competencies built up through its AI innovations in graphics processing units, or GPUs. Many of those capabilities can now be applied to the world of quantum computing, potentially giving Nvidia a leg up in yet another fast-moving corner of the information technology sector.
In May, the company announced partnerships with supercomputing centers in Germany, Japan and Poland using the company’s open-source Cuda-Q platform, which allows the integration of quantum processing units (QPUs), GPUs and CPUs into one system.
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7 Top Quantum Computing Stocks to Buy in 2024 originally appeared on usnews.com
Update 07/15/24: This story was previously published at an earlier date and has been updated with new information.
