A lot of smart people in tech seem to think that a potential “inflection point” in quantum computing is the real deal, and they may very well be right. With Alphabet (NASDAQ:GOOG) and Google CEO recently remarking on a “very exciting phase” for quantum over the next five years, suggesting that quantum computing might be where artificial intelligence (AI) was around five years ago, it certainly seems like it’s time for growth investors to get serious about the nascent technology. Of course, the quantum pure-play stocks have been a hyper-volatile trader’s playground over the past year, and nothing seems likely to change, at least over the near term.
In any case, Google’s Willow quantum processor is a big deal that could make Google every bit of a leader in quantum computing as it is in AI these days. Though it’s too early to tell where in the timeline quantum computing is, I certainly wouldn’t be shocked if AI (or superintelligence) were to pave the way for a sooner-than-expected prime-time commercialization of quantum computing technology. Of course, Willow and all the quantum pure-plays still have a lot of work (and spending) to do before quantum reaches its prime.
As for an inflection point, Jensen Huang seems to think one is in the works. And with AI-quantum hybrid computers potentially marking the next big steps, I do think that firms like Alphabet and Nvidia are very interesting and easier-to-value ways to get in on what could be a quantum boom through the 2030s.
In this piece, we’ll check out two names that I think have a lot to gain as quantum starts to advance to a stage where it’s no longer ignorable.
Alphabet
While I like what the mid-cap quantum pure-play stocks are up to, I cannot reliably value them. And for that reason, I’d much rather play quantum innovation with Alphabet. Undoubtedly, Alphabet is shaping up to be one of the best, diversified mixes of innovative technologies out there.
You’re getting leadership in AI, AI chips (with TPUs), self-driving vehicles (with Waymo), search dominance, a robust cloud business, a wide-moat force in YouTube, the Android ecosystem, Chrome, and, of course, some of the moonshot projects that might help keep Alphabet every bit as exciting as companies a fraction of its size.
In many ways, Alphabet is like a $3.8 trillion startup. And it may soon become the world’s largest company, with a similar startup mentality. With a genius in Sundar Pichai at the helm and more breakthroughs in quantum AI innovation likely on the way (look for Willow to pick up traction), it’s hard not to want to stick with the Mag Seven company that’s proven far more magnificent than the rest in recent months.
If AI leadership also translates to accelerated quantum innovation, I like Google’s chances of rising as a leader, especially if AI-quantum hybrids are the first step on the road to this new kind of computing boom.
IonQ
If you’re willing to take on a more significant amount of risk, it might be worth checking out IonQ (NASDAQ:IONQ) on weakness. The trapped-ion technology itself is very interesting and could be key to the future of quantum computing. However, I’m just unable to value the $17 billion company right here. The stock is down 40% from its peak and could easily shed another 40% and still not be cheap. With JP Morgan starting shares of IonQ with a neutral rating, implying a bit of downside from the current price, I’m in no rush to jump in here.
That said, if shares come in, IonQ may be the best pure-play to go with to play a five-year inflection point in quantum. With JP Morgan saying things like IonQ being “uniquely positioned to lead,” I would keep the shares on close watch should the latest plunge in quantum look to intensify further. Combined with a full-stack kind of platform, the stage seems set for something bigger, perhaps going into 2027 or 2028.
While nibbling on a few shares here couldn’t hurt, I would wait and see how the trade pans out before backing up the truck. The quantum boom is still in its early days.
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