7 Quantum Computing Actions to Beat the September Crisis

Growth stocks have had a painful 2022. And with another big Federal Reserve rate hike underway, market volatility is set to continue. However, longer-term investors can seize the opportunity by investing at discounted prices in broader tech trends. One such opportunity is in quantum computing stocks.

Quantum computing aims to reinvent the future of advanced computing. Historically, computing power has grown at a predictable rate largely constrained by Moore’s Law. It is the observation that as the number of transistors on a semiconductor chip tends to double every two years, the cost of calculation drops by half. This has long governed the pace of innovation in the computer industry.

However, we are reaching physical limits regarding the size of manufacturing technologies. To provide additional exponential gains, a new computational technique will be needed. Enter quantum computing. According Microsoft (NASDAQ:MSFT) fact sheet, “Quantum computers exploit the unique behavior of quantum physics – such as superposition, entanglement, and quantum interference – and apply it to computing.”

If successfully applied on a commercial scale, this new technique could offer breakthroughs in fields as diverse as artificial intelligence, biotechnology, computational chemistry and autonomous driving. Here are seven quantum computing stocks that stand to benefit.

GOOG, GOOGL Alphabet $105.90, $105.02
NVDA Nvidia $131.67
IBM International Business Machines $128.04
MSFT Microsoft $252.32
RGTI Rigetti $2.43
QBTS D-wave quantum $7.86
IONQ IonQ $5.88

Alphabet (GOOG, GOOGL)

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Many discussions of quantum computing begin with Alphabet (NASDAQ:GOOGNASDAQ:GOOGL) Inventory. In 2019, Google announced it had achieved quantum supremacy when its Sycamore quantum computer quickly calculated a problem that would take existing supercomputers thousands of years to complete.

This claim has since been criticized. In 2022, Chinese scientists responded, claiming that they had built a classical computer capable of performing the calculation in a similar time frame and outperforming Sycamore. As happens at the cutting edge of science, there remains a lot of rivalry and competition.

Either way, Google’s announcement sparked a land rush into the quantum computing space. Google is in a unique position in that while its Sycamore project sees growing success, it can leverage it into a wide variety of other futuristic projects such as artificial intelligence, healthcare and self-driving. It can take a long time for a quantum computing company to add much to Google’s revenue, given the scale of the core search and advertising business in comparison.

However, GOOGL stock is clearly part of the quantum computing conversation.

Nvidia (NVDA)

Hot and overvalued Nvda stocks still look like a buy

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Nvidia (NASDAQ:NVDA) targets a number of next-generation technology applications. One of them is quantum computing. Nvidia seems to present itself as sort of a pick and shovel to gain industry recognition.

It can do this by creating quantum simulations. Here’s the company’s explanation: “NVIDIA cuQuantum is an SDK of libraries and tools optimized for accelerating quantum computing workflows. Using NVIDIA GPU Tensor Core GPUs, developers can use cuQuantum to accelerate quantum computing simulations. quantum circuits based on state vector and order of magnitude tensor network methods.

NVDA stock has had a tough 2022 so far, with shares losing half their value since the start of the year. Graphics card prices are falling as the backlog of games clears and demand from the cryptocurrency community declines. Nvidia could face a tough time in 2023 given the current macroeconomic headwinds. However, its innovations in emerging areas such as quantum computing demonstrate that the company has much to look forward to despite its current challenges.

International Business Machines (IBM)

Quantum computing stocks: IBM sign with Canada headquarters in the background in Markham, Ontario, Canada.  IBM is an American multinational technology company.

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International Business Machinery (NYSE:IBM) has been working on developing its own quantum computing systems for some time. And it has had considerable success to date. Its Hummingbird computer system reaches 65 qubits of operating capacity in 2020. IBM aims to exceed 1,000 qubits in the next two years. Qubit capacity is a key consideration for when this technology can achieve commercial viability.

Investors might be skeptical of IBM’s abilities here. After all, the company has long touted Watson, its artificial intelligence-powered computer system that answers questions posed to it in natural language. Watson proved adept at winning at games such as chess and Jeopardy, but failed to achieve the levels of commercial notoriety that IBM’s stock bulls might have previously hoped for.

Will IBM’s quantum computing business follow a similar path? Only time will tell.

However, IBM maintains a very profitable core business while having one of the most powerful research and development teams in the world. Things like IBM’s quantum computing arm serve as bullish options that could suddenly push IBM’s stock higher.

Microsoft (MSFT)

Image of a corporate building with the Microsoft logo above the entrance.

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Microsoft (NASDAQ:MSFT) was once known for missing several key technology trends, such as smartphones. However, he has gotten much better at directing new moves. The company’s early and decisive entry into cloud services with Azure has been exceptionally successful. And now Azure is giving Microsoft a foothold in quantum computing.

Microsoft is building a quantum ecosystem within Azure. Both through Microsoft’s own internal products and with its partners, Microsoft provides quantum computing solutions to its customers.

It’s easier for customers because they can access quantum computing solutions through their existing cloud hosting instead of having to get a physical quantum computer. It also creates a huge lock-in for Azure in an increasingly competitive cloud computing industry. Quantum computing is still in its infancy and it remains to be seen exactly how customers will end up using and paying for this technology.

However, Microsoft’s leadership position in desktop software and cloud computing should naturally turn into quantum leadership as well.

Rigetti Computing (RGTI)

A conceptual image of a processor representing quantum computing.

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The last three quantum computing stocks to buy are pure play. It should be noted from the top that these are much more risky than the others on the list. These companies have yet to generate meaningful revenue or fully prove their business models.

Computing Rigetti (NASDAQ:RGTI), in particular is one of the major recently released SPACs related to quantum computing. Rigetti claims to have one of the most powerful quantum computing technologies on the market. And he has impressive research partnerships with organizations like the US Air Force and the Department of Energy.

Rigetti only generated $8.2 million in revenue in 2021 and is expected to bring in around $12 million this year. The company is probably still years away from generating substantial commercial demand. However, for pure quantum computing stocks, Rigetti is one to watch, and the stocks are certainly discounted after a 75% decline from their initial price.

D-wave quantum (QBTS)

Stock QBTS: Person holding mobile phone with Canadian hardware company D-Wave Systems Inc. logo on screen in front of webpage.

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D-wave quantum (NYSE:QBTS) is the most recent quantum computing stock to hit the market. It recently finalized its SPAC merger with DPCM Capital. QBTS stock fell from $10 to $8 in its first month of trading, offering new investors a discount today.

D-Wave is based in Vancouver and has been in business since 1999. D-Wave Quantum is still in the early stages of monetization, with only $8 million in revenue projected for this year.

However, the company has strong metrics in other regards. He has over 200 US patents, 100 published scientific papers and a top-five patent portfolio in the field of quantum computing. D-Wave boasts over 100 customers and offers the first real-time quantum computing platform. It remains to be seen how successful D-Wave will be. However, as a recent SPAC with limited float, stocks could appear on all sorts of positive developments.

IonQ (IONQ)

A conceptual image of a quantum computer with yellow, red and blue lights.

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This is by far the most controversial choice on this list. IonQ (NYSE:IONQ) claims to have “the most powerful quantum computer in the world”. short seller Scorpio Capital, however, called the company a “brazen scam” in an exhaustive 183-page report. For investors who aren’t quantum physicists, it can be difficult to assess the merits of the company’s technology and the resulting short-seller claims.

What we do know is that IonQ has generated little revenue so far. Even by its own admission, there is still a long way to go before enough qubits are developed to generate substantial commercial demand and finally achieve profitability. It has also been easy for short sellers to seek out SPACs with unproven trading models. Many of Scorpion’s points about the company’s current finances could be correct without invalidating its entire technology platform.

Either way, IONQ stock remains the market’s largest holding Quantum Defiance ETF (NYSEARC:QTUM) to September 12. For investors looking to speculate in a high-risk, high-reward quantum computing stock, IONQ stock is certainly cheaper today than it was a year ago.

As of the date of publication, Ian Bezek held a long position in IBM shares. The opinions expressed in this article are those of the author, subject to InvestorPlace.com publishing guidelines.

Ian Bezek has written over 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a junior analyst for Kerrisdale Capital, a $300 million New York-based hedge fund. You can reach him on Twitter at @irbezek.

Sherry J. Basler