Although artificial intelligence (AI) has been a leading technological trend on Wall Street over the last three years, it took a back seat in 2025 to an even hotter tech innovation: the rise of quantum computing.
During select points in 2025, pure-play quantum computing stocks IonQ (IONQ 1.63%), Rigetti Computing (RGTI 4.54%), D-Wave Quantum (QBTS 4.04%), and Quantum Computing Inc. (QUBT 4.00%) had rallied by up to 5,400% on a trailing 12-month basis. Investors with the foresight to see the potential in quantum computing generated life-altering turns.
However, Wall Street's savviest money managers offer a different perspective.
Image source: Getty Images.
Thanks to required quarterly Form 13F filings with the Securities and Exchange Commission, investors have the ability to track the stocks billionaire fund managers have been buying and selling. You might be surprised to learn that billionaire investors haven't been buying shares of IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing Inc. -- and with good reason. Instead, they've chosen to load up on shares of a company that can be foundational in the quantum computing space.
Quantum computing pure-play stocks are likely to face significant headwinds
On paper, specialized quantum computers can be a global game changer. There's potential to dramatically speed up the learning curve for AI algorithms, beef up the protection of AI-driven cybersecurity platforms, and vastly improve the drug development process through molecular interaction simulations.
But reaching the point where quantum computers are a more practical and cost-effective solution than classical computers will take time. Every major technological advancement over the last three decades has required time to mature and evolve. Companies like IonQ, Rigetti, D-Wave, and Quantum Computing Inc. are still in the very early stages of commercializing their quantum computers and services.
Even if the adoption rate of quantum computing solutions exceeds the initial expectations of Wall Street analysts and investors, it's doubtful that businesses will be anywhere close to optimizing this technology to maximize their sales, profits, and return on investment anytime soon. In other words, all the historical hallmarks for a quantum computing bubble taking shape and subsequently bursting are firmly in place.
NYSE: IONQ
Key Data Points
Additionally, the valuations of pure-play stocks are sounding alarm bells. Although it's challenging to value early stage companies, the price-to-sales (P/S) ratio has historically done a superb job.
Dating back to the proliferation of the internet in the mid-1990s, companies that have been at the forefront of a next-big-thing trend have commonly topped out at P/S ratios in the range of 30 to 40. No industry-leading public company has been able to sustain a P/S ratio above 30 for an extended period.
Entering the final week of 2025, IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing Inc. were sporting respective trailing 12-month P/S ratios of 141, 856, 315, and 2,760. Even with triple-digit annual sales growth, these valuations aren't sustainable, based on what history tells us.
The nail in the coffin for quantum computing pure-play stocks is that it'll be years before they're generating positive operating cash flow. IonQ has already raised $2 billion from a dilutive equity offering in October, and we'll likely see additional dilutive share offerings in the coming years.
Image source: Getty Images.
This is the foundational quantum computing stock billionaires want to own in 2026
Instead of purchasing pure-play stocks, the latest round of 13F filings from billionaire money managers shows they've piled into Google parent Alphabet (GOOGL 1.47%)(GOOG 1.40%).
In the September-ended quarter:
- The now-retired Warren Buffett of Berkshire Hathaway oversaw the purchase of 17,846,142 shares of Alphabet's Class A shares (GOOGL).
- Coatue Management's billionaire investor Philippe Laffont opened a new 2,091,564-share stake in the Class C shares (GOOG) and added 5,210,434 Class A shares.
- Billionaire Stanley Druckenmiller of Duquesne Family Office opened a 102,200-share position in Alphabet's Class A stock.
On top of these big-time buys, Alphabet is the second-largest holding for Seth Klarman's Baupost Group, and the No. 3 holding for billionaires Bill Ackman of Pershing Square Capital Management, Terry Smith of Fundsmith, and Chase Coleman of Tiger Global Management.
Alphabet is viewed as a cornerstone quantum computing stock by billionaires for three core reasons.
To begin with, Alphabet already possesses sustainable competitive advantages and several profitable operating segments. It's best known as the parent company of Google, which has held a 90% (or greater) share of global internet search dating back 10 years, according to data from GlobalStats. This makes Google the undisputed go-to for businesses wanting to target their messaging at consumers.
NASDAQ: GOOGL
Key Data Points
But Alphabet is also the parent of streaming service YouTube (the second most-visited social site on the planet), as well as Google Cloud. The latter is the world's No. 3 cloud infrastructure service platform by total spend. Since the margins associated with cloud services are substantially higher than advertising margins, Google Cloud has the potential to become Alphabet's premier cash flow generator by the end of the decade.
Secondly, Alphabet is absolutely swimming in cash. It closed out the September quarter with $98.5 billion in combined cash, cash equivalents, and marketable securities, and generated more than $112 billion in net cash from its operating activities through the first nine months of 2025. The point is that Alphabet has more than enough capital to aggressively invest in several high-growth initiatives, including cloud infrastructure, artificial intelligence, and (drum roll) quantum computing.
The third reason Alphabet is the premier quantum computing stock to own in 2026, based on the actions of billionaire asset managers, is its existing innovations within the industry.
In December 2024, Alphabet introduced the world to its newest quantum processing unit, known as Willow. Less than a year later, Alphabet ran its Quantum Echoes algorithm on Willow and achieved a processing speed that was approximately 13,000 times faster than the world's quickest supercomputers, all while suppressing errors.
Although pure-play quantum computing stocks IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing Inc. currently possess a first-mover advantage, Alphabet's profitable foundation and cash-rich balance sheet mean the barrier to entry in quantum computing is relatively low. It's the ideal investment to gain exposure to the quantum computing revolution -- and Wall Street's billionaire money managers know it!
