Why These 3 Quantum Computing Stocks Are Worth the Risk

Quantum computing may be the next big thing, and lots of people are talking about it. The potential to revolutionize industries from pharmaceuticals to finance has investors keeping a close eye on key players in this space.

But which companies are leading the charge?

To answer this critical question, a trio of Fool.com contributors with decades of high-tech analysis experience put their heads together and came up with three promising quantum computing stocks. Nvidia (NVDA 2.57%), IonQ (IONQ 1.32%), and D-Wave Quantum (QBTS 4.27%) offer very different approaches to the quantum market, but all three could make you a lot of money over the long haul.

So grab a coffee, sit back, and find out why these quantum computing stocks could be your next big investment.

Quantum computers need help, and help is already here

Nicholas Rossolillo (Nvidia): I recently wrote a couple of articles about quantum computing and some breakthroughs happening in the nascent industry — although “industry” is a bit generous. Quantum computing is more of a research and development initiative, not a full-blown industry.

Nevertheless, companies like Microsoft and start-up Quantinuum (majority-owned by Honeywell) have achieved incremental gains in quantum compute usefulness by pairing their quantum computers with classical computers. Why?

For one thing, the quantum mechanical measurements (“spooky” effects at the atomic level and smaller) are highly sensitive and prone to error. A tried-and-true classical computer can help correct those errors.

Thus, there may be no better classical computer right now than Nvidia’s accelerated compute platform, powered by its GPUs and full stack of software libraries and artificial intelligence (AI) algorithms. In early spring 2023, Nvidia said it released a quantum computer control unit powered by its chips. And more recently, the company said multiple research supercomputers around the world have expanded their capabilities using Nvidia’s CUDA-Q platform of GPUs and hybrid classical-quantum software algorithms.

And of course, Nvidia’s latest Blackwell platform represents another exponential speed up in classical computing power. Researchers are already lining up for Blackwell to fuel their development of quantum, a potential “next big thing” at some point in the future.

To be clear, Nvidia’s wild growth in the last year isn’t because of quantum computing. This is but one of many applications developers are hard at work on, thanks to Nvidia GPUs. However, when trying to figure out a best place to invest today in the nascent quantum R&D initiative, Nvidia may be the simplest stock for most investors looking toward the future of the computing sector.

Whether quantum computers become a mainstream reality or not may actually largely depend on the pioneer of computing power today. I’m happy to keep holding my Nvidia shares, for quantum development and a lot of other tech breakthroughs too.

The most pragmatic route to a quantum future

Billy Duberstein (IonQ): Quantum computing may seem like a speculative pie-in-the-sky bet. But quantum leader IonQ is actually making highly practical, tangible progress toward deploying quantum computing in real-world settings.

This has come down to the company’s deliberate choices, such as deciding to use the mature technology of trapped ion qubits as the backbone of its current systems. While synthetically made qubits or alternatives may ultimately be faster or superior far down the road, these other technologies require temperatures near absolute zero to deploy, and have challenges that may not be overcome for years. On the other hand, atomic qubits can be deployed at room temperature and can run for longer periods of time.

The choice allows IonQ to sell systems to customers such as the U.S. Air Force Research Lab and QuantumBasel in Europe. Thus, the company generates revenue, and its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss last quarter of $20.7 million seems manageable, given the company’s cash pile of over $434 million.

Moreover, the company appears to be executing at a high level for the state of the business. Last quarter, even though the company only generated $7.6 million in revenue, IonQ beat its own revenue guidance, as it was able to recognize more revenue from a contract that was based on the completion of project milestones. And the company boosted its 2024 bookings guidance to a range of $75 million to $95 million, up from guidance of $70 million to $90 million one quarter ago.

This comes on the back of several technical achievements made earlier this year. These include reaching a working #AQ 35 system a year earlier than forecast in January, as well as achieving “ion-photon entanglements” in February, a technological achievement that will allow quantum systems to communicate with each other and scale quantum networks.

And the company also continues to attract top talent. In March, quantum algorithm expert Martin Roetteler joined IonQ from Microsoft and will head the company’s efforts to develop real-world applications to run on IonQ’s quantum computers. On the recent conference call with analysts, management noted its teams are making “serious headway” in advancing real-world quantum software applications.

I think IonQ’s pragmatic and iterative approach is a good one, so that if quantum technology does manage to take off in the years ahead, it will likely be leading the pack.

A speculative bet on D-Wave Quantum

Anders Bylund (D-Wave): I’m going way out on a limb here: D-Wave Quantum is about as risky as you can get in the quantum computing industry. It’s a bona fide penny stock and barely large enough to talk about, with a market cap of just $200 million. The company is deeply unprofitable and its revenues skimpy, to the tune of merely $9.6 million over the last year.

So let’s get real — D-Wave is not a classic value investment and too hot to touch for most growth investors, too. It’s a speculative bet on the far future of quantum computing, and many things can go wrong along the way. Please keep your D-Wave investment small for now. If the company runs out of cash and goes out of business, make sure it doesn’t hurt you.

But I’m talking about an established leader in the quantum computing sector here. It has produced actual systems with thousands of qubits. Its quantum software and consulting services are available on the Amazon Web Services Marketplace. And above all else, D-Wave holds hundreds of quantum computing patents and citations, second only to IBM in both cases.

D-Wave seems to be leaning away from the costly systems-building business for the moment. Instead, the company is focusing on monetizing its treasure trove of technology patents.

So maybe IonQ, IBM, or Nvidia will rule the world in terms of quantum computing hardware sales. Perhaps I haven’t even heard of the sector’s biggest long-term winner yet. But D-Wave looks poised to ride the coattails of whoever the final king might be, providing patent licenses and consulting services to unlock the full power of next-generation computers. These services should be in high demand in a few years.

And starting from this barely-there stock market footprint, D-Wave could be worth the risk. A small investment in this intriguing and incredibly low-priced stock may pay off handsomely as the quantum industry evolves.

John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Anders Bylund has positions in Amazon, International Business Machines, and Nvidia. Billy Duberstein has positions in Amazon, IonQ, and Microsoft. Nicholas Rossolillo has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Amazon, Microsoft, and Nvidia. The Motley Fool recommends International Business Machines and recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.