The artificial intelligence (AI) theme has fueled stock market gains over the past few years, and with forecasts for more spending on AI infrastructure in the coming years, the momentum should continue. But this isn't the only high-growth area that savvy tech investors are watching these days. Another is the industry of quantum computing, a type of computing that, like AI, could revolutionize the way we solve problems.
Unlike AI, though, quantum computing is in earlier stages of development and hasn't yet been fully applied to real world problems. The good news for investors is this offers you even more time to consider quantum computing players and be among the first to get in on this potentially explosive growth story.
Your options are many, from pure play quantum companies to well-established tech leaders that have added quantum computing research and development to their repertoire. If you're an aggressive investor, you may aim for the former or a mix of the two, but if you're more cautious, you'll likely prefer the latter. Tech companies that already have profitable businesses offer you security -- and at the same time, their work in quantum computing could bring you massive growth down the road.
With this in mind, let's check out two quantum computing stocks that are great buys for any investor right now.
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1. Alphabet
You may know Alphabet (GOOG +0.34%) (GOOGL +0.20%) best for something you probably use very often, and that's Google Search. The company owns this top search engine, an asset that, through advertising, helps Alphabet generate billions of dollars in revenue and profit every year. The company also owns one of the world's leading cloud providers, Google Cloud, that's been producing double-digit revenue growth as well as billions of dollars in operating income.
So, Alphabet is a company that's proven itself in the technology field, is a leader in its specialty areas, and therefore offers you as an investor some safety. But the company also is an innovator, and one of its focuses right now is in the area of quantum computing. In fact, late last year, it announced two big milestones. The company's Willow quantum chip showed it could tackle a big quantum challenge and reduce errors exponentially as a system scales up. And the chip performed a computation in a few minutes that would take a supercomputer a timeframe greater than the age of the universe.
NASDAQ: GOOGL
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What's next for Alphabet on its path to quantum computing success? The company aims to apply Willow to real world problems, making it truly useful. This won't happen overnight, but Alphabet says the Willow generation of chips may accomplish the goal. So, there's reason to be excited about the company's potential in this high growth area.
Meanwhile, the stock trades for 25x forward earnings estimates -- that's cheap for a well-established player that also may become a winner in the quantum computing revolution.
2. Microsoft
Microsoft (MSFT +1.62%), like Alphabet, has demonstrated its strengths over the long haul. The company is a software giant and a leading provider of cloud services, and those businesses have delivered billions of dollars in earnings over the years. Long-term investors also have scored a win, as Microsoft stock has advanced more than 1,000% over the past decade.
These businesses continue to march on with strength, so there's reason to be confident about more long-term earnings gains and stock price performance from Microsoft. In addition to this, investors also may benefit from quantum computing growth by investing in this company right now.
This is because Microsoft is going all in on quantum computing. The company has made significant advances in research and development, and in recent times announced a new chip architecture that may lead to useful quantum computing "in years, not decades." The material used controls a type of particle in physics to produce better qubits, the basic "building blocks" used in quantum computing.
NASDAQ: MSFT
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Meanwhile, Microsoft also has launched a program to help companies become "quantum ready." This involves helping customers build hybrid applications, invest in the right skills, and develop platforms that can be properly scaled in the future.
Today, you can get in on Microsoft shares for 33x forward earnings estimates, a reasonable price for a technology giant that may be setting itself up for leadership in the hot growth area of quantum computing.
