Prediction: Top Investment Pick for Quantum Computing Shares in 2025
Quantum computing has been a buzzword in financial circles recently, with updates from notable tech companies grabbing headlines. In December, Alphabet (GOOGL 0.16%, GOOG 0.20%) made waves with its Willow chips, marking a notable milestone. Meanwhile, Microsoft launched its Quantum Ready program earlier this month to guide businesses better in understanding the tech.
Given these developments, quantum computing stocks like D-Wave, IonQ, and Rigetti Computing saw a surge, only to take a nosedive when tech CEOs, like those from Nvidia and Cisco, estimated useful quantum computing might be two decades away.
What's the deal with quantum computing? Why does it matter?
Classical computers depend on binary digits, or bits, which can only be 1 or 0. These bits are interpreted by transistors and processed by rapid switching between on and off positions. Conversely, quantum computers operate using quantum bits, or qubits, which can exist in multiple states at once. This unique property allows quantum computers to perform certain calculations more swiftly, solving problems faster than classical computers.
Although use cases are still evolving, experts anticipate quantum computers will excel in areas such as encryption (cybersecurity), molecular simulation (drug discovery), investment optimization (financial services), and advanced AI modeling.
Google's Quantum Leap: Two Steps Forward
Google revealed its latest quantum computing chip, Willow, in December. Engineers typically struggle with errors as more qubits are added, leading to increased errors. However, Willow defies this trend, as the company reported the more qubits it uses, the fewer errors it encounters. Furthermore, Willow managed to perform a random circuit sampling benchmark, traditionally the toughest challenge for current quantum computers, in under five minutes.
Though Google acknowledged its demonstrations were merely stepping stones towards practical applications, the market reacted as if the future was arriving. Quantum computing stocks soared, only to crash back down after Nvidia CEO Jensen Huang, speaking at the 2025 Ces conference, estimated useful quantum computing to be over twenty years away.
Why Alphabet Tops My Quantum Computing Stock Pick
Despite the recent dramatics in quantum computing, my top stock pick remains Alphabet. Google's cutting-edge efforts in quantum computing could potentially result in future monetization, but even if that doesn't pan out, Alphabet's dominant positions in digital advertising and cloud computing ensure steady growth.
With an annual expansion rate of 10% and 19%, respectively, through 2028, the growth of these markets will sustain Alphabet's earnings. The company's expertise in AI will help it create novel monetization opportunities across both sectors. As the current valuation (26 times earnings) seems reasonable given its four-quarter growth, investors looking towards the long term might be intrigued by Alphabet.
Enrichment Insights
Promising Market Prospects
The global quantum computing market is projected to grow from $1.1 billion in 2024 to $12.6 billion by 2032. Companies like D-Wave Quantum and Rigetti Computing have made impressive strides, with D-Wave introducing a commercial quantum computer focused on quantum annealing and Rigetti launching its 84-qubit Ankaa-3 system for quantum cloud services.
Investor Confidence
Despite market volatility, quantum computing stocks have experienced remarkable gains. D-Wave Quantum skyrocketed by 921%, Rigetti Computing climbed 77.5%, and IonQ more than doubled, reflecting investor excitement and confidence.
Future Opportunities
Financial services stand to benefit significantly from quantum computing through portfolio optimization, risk management, and fraud detection. Quantum computing's capability to analyze complex datasets simultaneously could lead to more accurate predictions and better decision-making in high-frequency trading environments.
Quantum Security Challenges
Quantum computing presents cybersecurity challenges, particularly in the face of potential vulnerabilities to break current encryption methods. Financial institutions need to adopt quantum-resistant cryptography to safeguard sensitive data.
Microsoft's Quantum Ready Program
Microsoft's Quantum Ready program aims to support businesses in becoming "quantum-ready" by 2025. The initiative has boosted shares of quantum computing stocks, including D-Wave Quantum, Rigetti Computing, and IonQ.
Investors who are keen on exploring the opportunities in finance might find interest in Quantum computing stocks, given their potential in areas like investment optimization. For instance, D-Wave, IonQ, and Rigetti Computing have seen significant gains, reflecting investor confidence in this emerging technology.
To effectively leverage Quantum computing in finance, it's crucial for businesses to understand the nuances of the technology. Microsoft's Quantum Ready program aims to guide companies in becoming 'quantum-ready' by 2025, providing a valuable resource for those looking to invest in this space.
