Quantum computing is quickly becoming a popular investing theme. I don't blame people for wanting to get in on the ground floor of a promising tech trend, but many of the real-world uses of quantum computers are likely years away.
But that doesn't mean a handful of quantum computing stocks aren't good investments right now. Here are two that could receive a big boost from artificial intelligence (AI) this year.
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Alphabet has impressive AI and quantum computing chops
Alphabet (GOOG -1.63%) (GOOGL -1.63%) recently unveiled a new quantum computing processor called Willow, which drastically reduces computing errors and achieves a benchmark computation standard.
The company said in a blog post that the new chip "paves the way to a useful, large-scale quantum computer," and Alphabet noted that Willow was made in the company's state-of-the-art fabrication facility in Santa Barbara, California, which is one of only a handful in the world.
Willow could be a big step forward for Alphabet. The company has already mentioned that it thinks quantum computing will eventually help scale AI, expanding its uses. That may be years down the road, but in the interim, Alphabet is already seeing success with AI.
Its Gemini chatbot is widely available to paying Google Workspace users, and the second iteration of Gemini will be a big step forward toward more agentic services. Specifically, the company envisions a hands-free AI assistant embedded in smart glasses and AI agents performing tasks for you like online shopping.
After a few early missteps, Alphabet successfully integrated Gemini into its search, instantly bringing AI to millions of online search users. About three-quarters of Alphabet's revenue comes from advertising, and keeping Google users tied to online searches via helpful Gemini summaries should help Alphabet hold on to those ad dollars.
A savvy AI leader with quantum computing services
Microsoft (MSFT -0.21%) has already made big strides into AI, with an early investment in ChatGPT maker OpenAI. The relationship between the two companies has evolved over the past couple of years, but it has given Microsoft access to the most advanced AI models and helped boost its position as a key cloud computing provider for AI.
The company's latest results show how well Microsoft's early AI bet has paid off. Its artificial intelligence offerings have an annualized revenue run rate of $13 billion, a massive 175% increase.
However, Microsoft isn't content with just integrating AI chatbots into its software and services; it's also taking big steps into quantum computing. One of the most significant is Azure Quantum Cloud, which gives customers access to quantum hardware and allows them to build and refine quantum algorithms.
Microsoft's Azure Quantum Cloud works with some of the leading quantum computing companies for hardware access, including IonQ, Quantinuum, and Quantum Circuits. With Microsoft already the second-largest cloud computing company (behind Amazon) with 20% of the market, its early moves into quantum services are a great first step to expanding its cloud opportunities as quantum computing demand increases.
A firm AI foundation for the future
Alphabet and Microsoft have already worked hard to achieve their current status in AI and quantum computing. Of course, there's plenty more work to be done, but as the need for more advanced AI services grows, the two companies should benefit from the foundation they've already laid.
Both stocks look like good buys to me right now, but if I had to choose just one, I'd opt for Alphabet, considering its shares have a forward price-to-earnings of just 21. That's a steal, and currently cheaper than the forward P/E ratio of the S&P 500.
