Quantum computing is hot right now. Shares of pure play quantum computing stocks have been soaring, and the hype train has clearly left the station. Investors should know, however, that quantum computers have never been used to solve a real-world problem faster than a traditional computer and that useful quantum computers could very well be decades away. While quantum computing is exciting and potentially a big deal, it's nowhere close to being a commercially viable reality.
Because quantum computing is likely at least many years away from being useful for real-world computations, the smart play is to bet on International Business Machines (IBM 2.71%) and Alphabet (GOOG 0.20%)(GOOGL 0.41%). If you've got $1000 to invest and want low-risk exposure to quantum computing, these two tech giants are no-brainers.
A quantum pioneer
The very first computer that took advantage of the complex and bizarre principles of quantum mechanics was built by researchers at IBM and a few major universities way back in 1998. Nearly three decades ago, those researchers successfully sorted an unordered list of items using a computer that used quantum bits, or qubits, fashioned from hydrogen and chlorine atoms.
NYSE: IBM
Key Data Points
IBM has been working on quantum computing technology since then, contributing to major advancements in the field. The company made a quantum computer accessible via the cloud in 2016, and it's built more powerful models in the ensuing years. IBM researchers used a 127-qubit quantum computer in 2023 to accurately solve a certain type of problem, albeit one without any real-world applications, faster than a traditional computer.
IBM's quantum roadmap calls for a quantum-centric supercomputer in 2025, a 200-qubit system in 2029, and quantum-centric supercomputers with thousands of qubits that may be capable of solving security, chemistry, machine learning, and optimization problems sometime after 2033. We're likely still many years away from useful quantum computing systems, but IBM is pushing hard toward that goal.
The big benefit of investing in IBM for exposure to quantum computing is that you're buying a global tech giant that doesn't have all its eggs in one basket. The company is a leader in hybrid cloud computing and enterprise AI, and it has a vast enterprise client base with relationships that span decades. Quantum computing could eventually be a big business for IBM, but even if the technology fails to live up to the hype, IBM is positioned to thrive.
For a low-risk quantum computing stock, IBM is the way to go.
Making major breakthroughs
Another tech giant making waves in the quantum computing space is Alphabet. Back in 2019, Alphabet used a 53-qubit quantum computer to perform a calculation in a few minutes that would have taken an estimated 10,000 years on a massive cluster of traditional computers. The specific calculation wasn't useful in any way, but the achievement was notable, nonetheless.
NASDAQ: GOOG
Key Data Points
One of the biggest problems that quantum computers must still overcome to be useful for real-world computations is error correction. Qubits are fragile, and all sorts of things, including thermal fluctuations or even cosmic rays, can introduce errors that derail a computation. While quantum computing researchers still have a lot of work to do in this area, Alphabet announced a major breakthrough last month.
Using its Willow quantum chip, Alphabet demonstrated that it could reduce errors exponentially as it scaled up the number of qubits. An increase in errors as a quantum computer is scaled up is one thing that's been preventing systems with many hundreds or thousands of qubits from being built. With Willow, Alphabet was able to push the error rate down as it raised the qubit count.
Willow was also able to solve a specific computation, again not useful in the real world, in five minutes rather than the 10 septillion years a traditional supercomputer would have taken. It may still be many years before Alphabet's quantum computers can solve a useful problem faster than a traditional computer, but it's putting the building blocks in place today.
Like IBM, Alphabet is a relatively low-risk way to bet on quantum computing. Useful quantum computers could be a big deal for Alphabet if it can apply them to tricky problems in AI, search, and other areas where the company operates. However, if the technology doesn't pan out or if it takes decades to push the field forward, Alphabet will still be a leader in digital advertising, cloud computing, and AI, and some of its other moonshots could pay off.
For a quantum computing stock with a quicker growth rate than IBM that's still not overly risky, Alphabet is a good choice.
