IonQ (IONQ +6.81%) is one of the most intriguing pure plays in quantum computing. The company is taking a different approach from most competitors, opting to use trapped-ion technology that uses actual atoms instead of the lab-fabricated quantum bits, or qubits, that most use. While these systems can have some higher upfront costs, atoms are naturally identical, which can help make them more stable. Meanwhile, keeping qubits stable is one of the biggest problems that these companies are trying to solve on their way to creating fault-tolerant quantum computers.
NYSE: IONQ
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For its part, IonQ is one of the accuracy leaders, achieving 99.99% two-qubit gate fidelity. While that sounds very high, it's still considered very error prone, but it puts the company ahead of much of the competition. At the same time, IonQ is looking to build an entire quantum ecosystem around its systems, investing in chip, software, and networking capabilities through both internal development and acquisitions. It also has its own manufacturing and research center and a lot of cash on its balance sheet to continue to pursue its goals.
That said, this is a company with a $17 billion market cap that's on pace to produce around $110 million in revenue in 2025. As such, you're paying a pretty hefty price for a company whose technology you don't know when or if it will be commercialized. That makes it highly risky, which is why it could be better to invest in some other high-potential reward tech stocks instead.
1. UiPath
NYSE: PATH
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While IonQ is pursuing a potential huge opportunity that is many years out, UiPath (PATH 3.18%) is chasing one a little closer to becoming a reality: artificial intelligence (AI) agents. Agentic AI is the next big potential phase of AI, where agents will go out and perform assigned tasks with little to no human supervision. This is a huge potential market, and not surprisingly, many companies are pursuing it.
However, UiPath isn't looking to be just another agentic AI platform; it's looking to be the orchestration layer that can handle a growing number of AI agents from various vendors. When organizations are dealing with a variety of AI agents from companies like Salesforce and Workday, they ultimately need a platform that can help manage them. That is where UiPath's Maestro platform comes in. The company is a leader in robot process automation (RPA), which involves using software bots to automate simple tasks. This has given the company the governance and compliance foundation to help manage both software bots and AI agents.
UiPath is still in its early transition to an agentic AI orchestration platform, but its revenue is starting to accelerate, and the opportunity ahead is huge, making it a solid high-potential stock to buy at current levels.
Image source: Getty Images.
2. IBM
NYSE: IBM
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For investors who are looking for a less risky quantum computing play, IBM (IBM +2.59%) is your best bet. This is not your father's stodgy IBM. The company spun out its low-gross-margin information technology infrastructure service business into Kyndryl in 2021 and has been seeing its growth driven by AI. At the same time, it has made quantum computing a priority.
Within its software segment, IBM's growth is being driven by automation and AI solutions, such as watsonx and Red Hat. Customers are using watsonx for AI governance and Red Hat OpenShift to help run AI in multicloud environments. The company's consulting business has returned to growth as it helps customers move AI programs from pilots into production. Meanwhile, mainframes are back, and its new z17 system, designed for inference, saw huge growth in Q3. At the same time, IBM is chasing quantum computing on multiple fronts. Its Qiskit software platform is one of the standards for quantum research and is optimized for its hardware. It's also designing two quantum chips. With Nighthawk, it is looking to gain a quantum advantage in the next few years, while with Loon, which is designed to reset failed qubits during a calculation without stopping, it is looking to build the first fault-tolerant quantum computer.
With the company benefiting from AI and pushing hard into quantum computing, IBM is a solid stock to own with much less risk than pure-play quantum computing companies like IonQ.
