Quantum computing continues to edge its way into the business and technology world, hinting at huge potential in an industry that has yet to hit the big time.
That day may be sooner than you think.
The quantum computing industry is estimated to generate between $450 billion and $850 billion of economic value by about 2040, according to international consulting firm BCG. That should support a market of $90 billion to $170 billion for hardware and software providers alone, the firm notes.
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While BCG reports that quantum computing currently offers “no tangible benefit” over classic computing capabilities, momentum is in the quantum sector’s favor. Physical qubits on quantum circuits (a closely watched performance metric in tech laboratories and research centers) have doubled yearly since 1981.
As a result, quantum computing-based venture capital funding crested $1.2 billion in 2023, according to BCG, and global governments are expected to ante up $10 billion in industry funding as soon as 2027.
Whether biopharmaceutical companies leverage quantum computing for drug discovery or energy companies use the technology to advance solar conversion, quantum computing’s day in the sun isn’t far off. Here’s a closer look at eight of the biggest and most appealing quantum computing stocks in the market and why buying them now rather than later may be a savvy portfolio decision:
| Quantum Computing Stock | YTD Return as of Oct. 1 | Forward Dividend Yield |
| Honeywell International Inc. (ticker: HON) | -1.7% | 2.2% |
| Microsoft Corp. (MSFT) | 11.9% | 0.8% |
| FormFactor Inc. (FORM) | 5.9% | N/A |
| IonQ Inc. (IONQ) | -34.1% | N/A |
| International Business Machines Corp. (IBM) | 34.1% | 3.1% |
| Alphabet Inc. (GOOG, GOOGL) | 27.6% | 0.5% |
| Nvidia Corp. (NVDA) | 136.3% | 0.03% |
| Intel Corp. (INTC) | -54.9% | 2.2% |
Honeywell International Inc. (HON)
Honeywell has had a lackluster 2024 to date, and the Charlotte, North Carolina-based software-industrial giant is trying to make it up to shareholders with a 5% dividend increase announced in late September. The company’s forward dividend yield is 2.2%.
On the quantum computing front, Honeywell is mulling over an initial public offering for its Quantinuum quantum computing unit, which the company rolled out in a partnership with Cambridge Quantum in 2021. HON has poured $300 million into Quantinuum in recent years. That investment has paid off, as Quantinuum has a targeted $10 billion valuation that should yield a big return if and when Honeywell takes the company public.
Quantinuum’s computing efforts attract interest from various industries, including pharmaceuticals, chemicals, finance, aerospace and defense, oil and gas, data centers, manufacturing, and telecommunications.
Microsoft Corp. (MSFT)
MSFT stock hasn’t caught fire yet in 2024, with shares up about 12% on a year-to-date basis as of Oct. 1. That’s well below the 19.7% the S&P 500 has garnered in the same timeframe.
Maybe MSFT’s quantum computing business will give the stock a shot in the arm. The odds of that happening increased with a Sept. 10 announcement citing the best-performing logical qubits ever recorded as part of a collaboration with Quantinuum. That alliance, powered by a bolstered qubit-virtualization system, has yielded 12 highly reliable logical qubits, which Microsoft says is a new frontier for the quantum industry.
That news came on the heels of an April announcement that the collaboration had developed algorithms to improve the error rate by 800 times that of traditional qubit-powered quantum computers, a step toward further commercialization of the technology.
Microsoft’s cloud platform, Azure, which offers quantum capabilities for research in areas such as environmental sciences, agriculture, health, energy, climate and materials, is also getting a boost via new priority access to reliable quantum computing hardware in Azure Quantum. That should help researchers in disciplines such as chemical, physical and life sciences address computing speed issues that have long hampered research and development.
FormFactor Inc. (FORM)
Semiconductor gear maker FormFactor has had an up-and-down year, stock-wise. It has gained about 6% year to date, but its shares are down 27.5% over the past three months. The stock closed at $44.17 per share on Oct. 1, well below its early-July high above $63.
However, Wall Street analysts are backing the firm, with Craig-Hallum’s Christian Schwab issuing a “buy” rating in mid-September with a $62 price target. B. Riley Securities went a step further, with a share-price upgrade to $74 based on the company’s lucrative opportunities in artificial intelligence and its ongoing work in developing cryogenic test and measurement solutions for quantum engineers.
One reason for the positive outlook is higher revenues and profits. FormFactor reported second-quarter revenue of $197.5 million and a net profit of $19.4 million, quite a jump from the same period in 2023, when FormFactor reported revenues of $155.9 million and net income of $828,000.
A key part of the company’s business is cryogenic systems. Maintaining the low temperatures required for the components to function properly is a major challenge in commercializing quantum computers. FormFactor’s line of refrigerators is designed to support the low temperatures needed for research using quantum computers.
IonQ Inc. (IONQ)
Maryland-based IonQ is another up-and-comer in the quantum computing field, snagging a $54.5 million quantum systems contract with the U.S. Air Force Research Lab in late September and between $75 million and $95 million in expected quantum computing development contracts by the end of 2024.
IonQ went public in 2021, and the company is not yet profitable like some other stocks that have made big upside moves in their first few years after going public. The company has partnerships with SoftBank Investment Advisers and the University of Maryland to expand its work in quantum computing development. It also works with major cloud platforms like Microsoft’s Azure and Amazon Web Services.
Revenues have doubled every year since 2022 and rose 104% from the second quarter of 2023 to the second quarter of 2024. Those figures suggest a clear path to further revenue gains for IonQ, which is trading roughly 60% below its year-long highs but has made big strides in the past three months as shares have risen by about 20%.
Bargain hunters may find it’s a good time to buy this feisty quantum computing stock while it’s running under the radar.
[See: Artificial Intelligence Stocks: The 10 Best AI Companies.]
International Business Machines Corp. (IBM)
IBM is having a solid year, with its stock price up about 34% through Oct. 1 and up 56% for the past year. Shareholders also enjoy a robust 3.1% dividend yield and have stability in a historic tech brand name with a market cap of $202 billion.
The company is also making great strides in the quantum computing space with its latest IBM Quantum system. Its IBM Quantum Heron processor is achieving “reduced error rates at 16 times better performance, and a 25-fold increase in speed over 2022 IBM Quantum systems,” the company reported in September.
Big Blue is also rolling out its most recent IBM Quantum Data Center expansion in Poughkeepsie, New York, which operates the highest number of available utility-scale quantum computers at a single location in the world, IBM says. Poughkeepsie is officially the global hub for IBM’s Quantum Network, which has expanded after a second IBM Quantum Data Center launched on Oct. 1 in Ehningen, Germany.
Alphabet shares traded moderately lower through September, and they’re up 27.6% for the year but down 8.7% over the past 90 days as of Oct. 1. But analysts are shrugging at the recent share-price decline and seem generally bullish on Alphabet’s stock. Pivotal Research just launched its GOOG coverage with a “buy” rating and a $215 price target, citing strong AI growth and the company’s stranglehold on the internet search marketplace.
In late September, Oppenheimer also chimed in with a “buy” outlook at a $185 price target. While analysts buzz about Google’s rising AI presence and market leadership position in online search, it has been developing its own line of chips for AI and other cloud-computing applications, including quantum computing chips.
That scenario gives Alphabet investors the best of both worlds — immediate access to company gains in AI, cloud computing and internet search along with a foothold in the burgeoning quantum computing sector.
Nvidia Corp. (NVDA)
As usual, Nvidia stock is climbing in 2024, earning 136.3% year-to-date gains for shareholders, although shares have lost nearly 6% over the past three months. That should be a blip on Nvidia’s ever-expanding radar screen. The company’s second-quarter revenues were up 122% year over year, buoyed by its dominance in the AI chip sector.
Nvidia is making a name for itself in the quantum computing world as well, as it takes full advantage of the competencies built up through its AI innovations in graphics processing units, or GPUs. Many of those capabilities can now be applied to quantum computing, 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 its open-source CUDA-Q platform. This platform allows the integration of quantum processing units (QPUs), GPUs and CPUs into one system. Nvidia also noted that CUDA-Q “has been adopted by three-quarters of companies deploying quantum processing units.”
Intel Corp. (INTC)
Intel had a stroke of bad luck linked to the massive Hurricane Helene damage in North Carolina over the past week, leading to a further decline in the company’s share price after a tumultuous year. The storm shut down key mines in the western North Carolina town of Spruce Pine, a global mineral development hub for ultra-pure quartz, a key component in the creation of high-level silicon chips. Intel relies heavily on the quartz found in Carolina mountain towns for the company’s chip processing needs, so any lengthy delay in restarting mining may hurt INTC shares.
As devastating as the hurricane damage is, the quartz-mining issue is temporary. Intel is well protected by ongoing work in other technology areas, such as quantum computing. Intel Labs has long been developing quantum computing solutions for commercial purposes, and its Tunnell Falls advanced silicon spin qubit chip is helping Intel develop a full-stack commercial system that aims to solve real-world problems. The company says it’s “making the chip available to the quantum research community to spur advancements in the field.”
Intel is down about 55% on a year-to-date basis as of Oct. 1, but amid acquisition interest from some of the biggest names in the business and a recent Financial Times report that the U.S. government is poised to inject the chipmaker with $8.5 billion in direct semiconductor funding, this stock is one to watch as 2024 comes to a close.
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8 Best Quantum Computing Stocks to Buy originally appeared on usnews.com
Update 10/02/24: This story was previously published at an earlier date and has been updated with new information.
