Many growth investors gravitated back toward the cryptocurrency market this year as hopes for lower interest rates, the approvals of the first Bitcoin spot price exchange-traded funds (ETFs), and big institutional purchases suggested the "crypto winter" was over. However, it's still tough to gauge the true value of most cryptocurrencies, since their price is driven more by supply and demand than by an actual underlying business.
Earlier this month, I suggested that investors buy three promising tech stocks -- Nvidia, Super Micro Computer, and ASML -- instead of going all-in on cryptocurrencies. Today, I'll add three other speculative plays to that list of potential cryptocurrency alternatives: Symbotic (SYM +5.30%), QuantumScape (QS +9.64%), and IonQ (IONQ +9.73%).
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1. Symbotic
Symbotic is a provider of warehouse automation robots and software. It claims a $50 million investment in just one of its modules (which includes its robots and software) can generate $250 million in lifetime savings over 25 years.
Symbotic went public by merging with a special purpose acquisition company (SPAC) in June 2022. Its revenue surged 136% in fiscal 2022 (which ended in September 2022) and 98% in fiscal 2023. However, most of that growth came from a deal with Walmart, which tapped Symbotic to automate all of its regional distribution centers across the U.S. through fiscal 2034. Walmart still owns 11% of Symbotic and accounted for 88% of its revenue in fiscal 2023.
NASDAQ: SYM
Key Data Points
That customer concentration is worrisome, but it's secured deals with other big retail customers like Target, Albertsons, and C&S Wholesale. It also launched a new warehouse-as-a-service platform called GreenBox with its other big backer, SoftBank, last July.
Analysts expect Symbotic's revenue to rise 48% in fiscal 2024 and 42% in fiscal 2025. It's still bleeding red ink, but it's expected to turn profitable on a generally accepted accounting principles (GAAP) basis by fiscal 2025. Its stock isn't cheap at 16 times this year's sales, but it might be a great pure play on the warehouse automation market.
2. QuantumScape
QuantumScape develops solid-state batteries, which are more stable, charge faster, and last longer than traditional lithium-ion batteries. Those batteries are a great fit for the electric vehicle (EV) market, and the company's biggest backer is Volkswagen. Like Symbotic, QuantumScape went public by merging with a SPAC in November 2020. But unlike Symbotic, QuantumScape doesn't generate any meaningful revenue yet.
NASDAQ: QS
Key Data Points
QuantumScape hasn't commercialized any of its batteries since its public debut, but its latest batteries could give EVs a range of 400-500 miles with a charge time of less than 15 minutes. It's also developing batteries that can reach 600 miles with a charge time of under 30 minutes. For reference, most top-tier lithium-ion batteries for EVs have a range of roughly 300 miles and a charge time of 30 minutes. Volkswagen also recently conducted an endurance test that found that QuantumScape's batteries could power an EV for over 310,000 miles "without any noticeable loss of range." Most lithium-ion batteries lose approximately 10% of their range after the first 200,000 miles.
QuantumScape's technology sounds disruptive, but it's tough to value its stock without any revenue. However, if it successfully commercializes its first batteries before its like-minded competitors, its stock could skyrocket over the next few years.
3. IonQ
Investors looking for another speculative play should take a look at IonQ, a quantum computing company that merged with a SPAC in October 2021. IonQ provides quantum computing power as a cloud-based service, and it's trying to shrink qubit processing unit (QPU) systems from several feet to a few inches wide with its "trapped ion" technology.
It expects that miniaturization to make it easier to build large quantum computing systems that process binary "bits" of zeros and ones simultaneously. That big leap could support the growth of the cloud, machine learning, and artificial intelligence (AI) markets.
NYSE: IONQ
Key Data Points
IonQ gauges its quantum computing power in algorithmic qubits (AQ). It achieved AQ 29 in 2023, AQ 35 earlier this year, and it aims to reach AQ 64 by 2025 with a longer-term target of 1,024 by 2028. It only generated $22 million in revenue in 2023, but it continues to lock in new government and commercial customers. Analysts expect its revenue to rise 77% in 2024 and 110% in 2025 -- so it could still have plenty of upside potential.
IonQ isn't profitable yet, and its stock looks pricey at nearly 50 times this year's sales. But if it can achieve its ambitious miniaturization goals and scale up its business, its sales could soar as the nascent quantum computing market expands.
