Quantum Computing (QUBT 2.43%), also known as QCi, has gone on a wild ride since it was uplisted from the over-the-counter (OTC) market to the Nasdaq Capital Market on July 15, 2021. It started trading at $6.60 per share, but it sank to a record low of $0.42 on July 1, 2024.
However, the market's enthusiasm about quantum computers, which can process specific tasks much faster than classical binary computers, propelled its stock back to about $12. A $1,000 investment at its all-time low would be worth nearly $27,400 today.
Image source: Getty Images.
QCi initially generated a lot of buzz because its photonic quantum chips -- which process data by beaming light through chips, fibers, and optical circuits -- are manufactured in conventional chip fabs and operate at room temperature. That sets them apart from other types of quantum chips, which are more challenging to manufacture and often require cryogenic refrigeration.
In theory, QCi's chips can be cheaper, more scalable, and require less maintenance than the electron- and ion-driven systems most quantum computing companies use. Yet in reality, QCi's chips still output more errors than those of established technologies, require pairing with large optical systems, and still cost more to manufacture in small batches.
QCi opened its first foundry last May and began delivering its first chips. However, it still generates most of its revenue from professional services contracts and its cloud-based Dirac-3 quantum computing platform rather than from chip sales.
NASDAQ: QUBT
Key Data Points
For 2026, analysts only expect QCi to generate $2.8 million in revenue. Yet with a market cap of $2.69 billion, it trades at 960 times that estimate. That meme stock valuation could limit its upside potential and make it an easy target for short sellers during the next market crash.
Nearly 22% of its outstanding shares were shorted at the end of 2025, and that ratio could rise as more investors realize it will take the company years to scale its chipmaking business. So instead of chasing QCi's volatile stock, investors should invest in a more stable, dividend-paying pioneer in the quantum computing market: IBM (IBM +0.06%).
Why is IBM the better quantum stock?
IBM was considered an aging tech giant that had run out of room to grow. From 2011 to 2020, its annual revenue plunged from $106.9 billion to $55.2 billion as it divested its weaker businesses and struggled to expand its core software, hardware, and IT services divisions. Instead of investing in newer technologies to reinvent its business, it aggressively cut costs and plowed a lot of its cash into wasteful buybacks to prop up its earnings per share (EPS).
That all changed after Arvind Krishna, IBM's cloud chief, took the helm as its CEO in 2020. Under Krishna, it spun off its struggling managed infrastructure services segment as Kyndryl (KD +1.03%) and expanded Red Hat's hybrid cloud and artificial intelligence (AI) services.
NYSE: IBM
Key Data Points
That strategic shift helped IBM grow revenue and EPS at CAGRs of 3% and 1%, respectively, from 2020 to 2024. From 2024 to 2027, analysts expect IBM's revenue and EPS to grow at CAGRs of 5% and 19%, respectively, as its turnaround continues.
As its core business stabilizes, IBM is expanding its smaller quantum computing business, which develops electron-driven chips optimized for power and accuracy instead of scale. It's already deployed over 85 quantum systems, which have run at least 3 trillion programs to date. It's developed several experimental chips -- including Eagle, Heron, Nighthawk, and Loon -- to create a fully fault-tolerant quantum system by 2029.
IBM deploys both research-scale quantum systems, which run less than 100 qubits, and utility-scale systems, which run more than 100 qubits. Like other early movers in the quantum computing market, it mainly serves universities and government research institutions.
IBM's quantum computing business won't generate meaningful revenues until its technology matures and it gains more mainstream customers, but it's off to a great start. IBM's stock might seem a bit pricey at 30 times this year's earnings. Still, its accelerating growth and exposure to the growing hybrid cloud, AI, and quantum computing markets justify that higher valuation. It's also raised its dividend annually for 30 consecutive years, and it pays a forward yield of 2.3%.
While IBM might not attract as much attention as QCi or the market's hotter quantum stocks, it's a more attractive long-term investment. It's more of a cloud and AI play today, but it's well-positioned to become a leader in the emerging quantum computing market.
