Similar to artificial intelligence (AI) investing, quantum computing offers investors a wide range of options. There are quantum computing pure plays that give investors massive upside in exchange for risk. Other cloud computing players will benefit from increased workloads being run on their clouds due to having access to quantum computers.
And there's another branch of companies that will provide some of the components necessary to make quantum computing a reality. That last cohort is also heavily involved in the artificial intelligence arms race and is an intriguing group to consider.
These are some backdoor quantum computing plays that not every investor is thinking about, and are worth considering buying right now.
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Nvidia
Nvidia (NVDA 1.07%) and its graphics processing units (GPUs) have built the majority of the AI computing power that we know today. There is a massive amount of computing power still to be built out, which will create a massive network that quantum computing will eventually have to interface with. While quantum computing can deliver impressive results on its own, the real value comes from integrating quantum computing with traditional computing in a hybrid approach.
This will require some specialized software to communicate with quantum computers, which Nvidia has already developed. One of the main reasons why Nvidia was the dominant company in the AI arms race to date is its CUDA software, which allows developers to control GPUs to divide workloads and have them do specific tasks. Nvidia has already adopted this software to interface with quantum computers, launching CUDA-Q.
This software ensures that Nvidia hardware will need to be used to bridge the gap between quantum and traditional computing, making Nvidia a benefactor of the quantum computing arms race, regardless of which company develops a winning solution. Furthermore, Nvidia is already winning the AI computing hardware arms race, making it an already successful business.
This makes Nvidia stock a great buy in both the quantum and AI investing realms, and this stock has plenty of room to run if both of these trends continue panning out.
Taiwan Semiconductor Manufacturing
Both quantum computing and AI are impossible without high-tech specialized chips. There's one chip foundry in the world that stands out from the others with its leading technology and impressive yields, and that's Taiwan Semiconductor Manufacturing (TSM 2.98%). It's the largest chip foundry by revenue, and has established itself as a technological leader in this space.
An investment in TSMC is a bet that we're going to need more advanced chips in greater quantities, and with the rise of AI and quantum computing technology, it's in a spot to benefit no matter which company wins the AI or quantum computing arms race.
This stock is a lower-risk way to play both investment trends; however, it's much cheaper than many of its peers, and can be purchased for 31 times forward earnings.
Taiwan Semiconductor is an excellent way to capitalize on both the AI and the quantum computing arms race, as it will be a winner in nearly every scenario (as long as companies keep spending on computing power).
ASML
Lastly, there is ASML Holding (ASML 3.77%). ASML makes highly specialized machines involved in the chip production process that only it has the technology to make. This gives ASML a technological monopoly, which is quite rare. Considering how many more chips are expected to be needed thanks to AI and quantum computing, ASML will need to sell a lot more machines to chip fabricators like TSMC to meet demand.
Over the past 12 months, it has generated around 32.2 billion euros ($37.4 billion) in revenue. Still, that figure could rise to 44 billion to 60 billion euros ($51.1 billion to $69.7 billion) by 2030 as chip demand ramps up, according to management's projections.
ASML is another great way to play this hybrid AI and quantum computing arms race, and the stock has plenty of room to run if it can achieve its financial goals.
