Quantum computing stocks come in a surprising variety of shapes and sizes. I'm not here to recommend one of the smaller quantum experts that have skyrocketed in recent months. They are too risky for my taste, and their big gains seem to be based on unrealistic expectations.
But there are better options out there. You should consider turning your sights to IBM (IBM 0.56%) and Alphabet (GOOG 0.56%) (GOOGL 0.42%) instead.
This way, you can combine market-leading quantum computing expertise with robust business models -- and modestly priced stocks. What's not to love in a safer approach to this exciting technology market?
Image source: Getty Images.
Alphabet's quantum chip is changing the quantum game
First, you probably already know about the quantum computing research Alphabet is doing. The company's Google Quantum AI group was the driving force behind the recent industry boom, after all.
Maybe you didn't notice. In short, Google's quantum computing researchers developed a new chip called Willow. This processor introduced a more effective error correction process, which made it more effective in the error-flooded real world. As a result, Willow completed an industry-standard quantum computing test (which essentially boils down to "prove that you can do some really basic quantum computing") at a record speed. A world-class digital supercomputer would spend several times the lifetime of the universe to accomplish the same thing, according to the quantum AI team's estimates.
And the gloves were off. Every pure-play quantum computing expert saw skyrocketing stock returns over the next few weeks as investors chased the game-changing promise of "the next big thing."
Again, none of the soaring quantum computing experts did the work that inspired this boom. It was Google, a deep-pocketed technology giant with more than a decade of research experience and hundreds of patents in the field.
That being said, quantum computing remains a small piece of Alphabet's massive business puzzle. With $350 billion in revenues last year and $95.7 billion of cash equivalents in the bank, the deep-pocketed company can afford to throw billions of dollars into this research effort. Even big mistakes and expensive development projects won't hurt Alphabet much.
And the stock is arguably undervalued right now. Alphabet's Class A shares (with voting rights) trade at a modest 23.2 times trailing earnings and 6.5 times sales. It's the most affordable stocks in the "Magnificent 7" group in many ways.
Alphabet is a proven tech giant with an undervalued stock, and it's a leading developer of quantum computing technologies. I don't think you can go wrong with this stock.
NASDAQ: GOOGL
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IBM's quiet quantum quest
If IBM were a member of the "Magnificent 7" collective, it would fight Alphabet for the valuation title. Big Blue's stock trades at 3.8 times sales and 39 times earnings right now, and it looks especially strong in terms of price to free cash flows. IBM is a cash machine, and its artificial intelligence (AI) business is starting to raise a buzz.
At the same time, IBM is another world-class developer of quantum computing technology. It's the only American company with more quantum computing patents than Alphabet. The research ranges across all corners of the quantum computing field, with a particular focus on "bringing useful quantum computing to the world."
And that's really the gold prize, isn't it? Whoever might develop the first commercially useful quantum computing system should see a massive order volume in the early days of that era. Other competitors may find it difficult to catch up with the resulting first-mover advantage. I can't guarantee that IBM will be that market-defining early leader, but it's encouraging to see that the company is working toward that exact goal.
NYSE: IBM
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Take a quantum leap into these tech titans
So if you're looking for long-term investment ideas in quantum computing, I highly recommend taking a look at IBM and Alphabet. They are not the only current tech titans with a finger on the pulse of this promising market, but their combination of established leadership and affordable stocks makes them hard to beat in 2025.
