Right now, artificial intelligence (AI) investing is all the rage. AI hyperscalers are spending billions of dollars on AI computing equipment, and that trend doesn't appear to be slowing anytime soon. However, there's another important computing trend that's on the horizon, and it could have significant ramifications in the AI space.
Quantum computing is the next big computing trend coming, and it could affect the AI realm. By picking the right stocks, investors can take advantage of both trends, making the stocks involved in both fantastic options to buy and hold over the next decade.
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1. Alphabet
Alphabet (GOOG 0.56%) (GOOGL 0.59%) is a leader in both the AI and quantum computing realms. In quantum computing, it kicked off a miniature quantum computing investment rush last December when it announced the results of its Willow quantum computing chip. Alphabet has a massive incentive to develop its own in-house quantum computing solution, as it won't have to purchase expensive computing units from third-party vendors like Nvidia. Alphabet has nearly unlimited resources to spend on quantum computing compared to some of the pure plays, and this advantage could yield a viable quantum computing solution.
NASDAQ: GOOGL
Key Data Points
Alphabet also has a leading generative AI model in Gemini that has emerged as one of the top picks. Quantum computing could be the technology necessary to take AI to the next step, and if Alphabet develops a strong in-house solution, it could propel it to win both the quantum computing and AI arms races.
Even if it fails at both, it still has a strong base business to fall back on. Alphabet is a great pick in both the AI and quantum computing spaces, but it's also a relatively safe investment.
2. Taiwan Semiconductor Manufacturing
Quantum computing requires specialized chips to help make sense of the calculations. The best semiconductor company in the world is Taiwan Semiconductor Manufacturing (TSM +1.14%), and it will be heavily involved in the quantum computing realm, just like it is with the AI arms race.
NYSE: TSM
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Taiwan Semiconductor is constantly developing new technology, with the latest advancement coming from 2nm chips. An investment in Taiwan Semiconductor is a bet that the world is going to need more advanced chips in greater quantities, which is a no-brainer idea. By the time quantum computing becomes commercially viable, Taiwan Semiconductor will have already developed several new generations of chips, which could have massive ramifications in the quantum computing realm, including whether it's worth the cost over classical computing methods.
Time will tell which quantum computing company develops a winning solution, but odds are that chips going into these processing units will likely be sourced from TSMC.
3. Nvidia
Nvidia is the undisputed king of AI investing, but has no plans to develop a quantum processing unit. However, that doesn't mean that it's ignoring the quantum computing realm. Instead, it's focusing on ways to integrate quantum computing devices into existing classical computing networks that feature its graphics processing units (GPUs) in a hybrid approach. This is a genius path to take, as the quantum computing realm is highly competitive, and Nvidia doesn't want to take its focus off of what it does best.
NASDAQ: NVDA
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Nvidia has adapted its CUDA software to the quantum realm and has launched it as CUDA-Q. This provides quantum computing developers the same technology that allowed its GPUs to dominate the AI arms race, and will also lock users into deploying the Nvidia ecosystem to support quantum computers.
By investing in Nvidia, you're capturing the bulk of the AI computing power buildout while also bridging the gap to the next big technology. Furthermore, by not ignoring the massive AI spending that's going on now, you reduce the risk of missing out on huge returns that may or may not come from quantum computing, as the technology is still working on establishing commercial viability.
