It seems like every artificial intelligence (AI) stock has a sky-high valuation right now. That's why smart investors may want to look into what some are calling the next big thing: quantum computing.
By using qubits -- computer components derived from quantum particles -- quantum computers can achieve calculation processing speeds trillions of times faster (or more) than traditional computers. The drawback is that right now, quantum computers tend to be massive, expensive, error-prone, and definitely not ready for the mass consumer market.
Even so, there are plenty of stocks that look like great buys for someone who wants to invest in quantum computing. Here are 3 of the best options out there.
Image source: Getty Images.
1. Rigetti Computing: The developer-friendly option
Although there aren't many individuals who own a quantum computer right now, you can use one from just about anywhere. That's thanks to quantum-computing cloud platforms like the one offered by Rigetti Computing (RGTI 5.14%), which also makes quantum processing units (QPUs).
Rigetti began offering quantum computing services via the cloud in 2017, and made it a priority to court developers and encourage them to familiarize themselves with the platform. The company introduced a 9-qubit QPU called Novera in 2023 that could be plugged into existing on-site quantum infrastructure by a customer. It piggybacked on the success of these 9-qubit chiplets by deploying a 36-qubit system, the Cepheus-1, that was based on four 9-qubit chiplets tiled together.
NASDAQ: RGTI
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Earlier this month, Rigetti announced that development of its 108-qubit system (featuring 12 nine-qubit chiplets) was proceeding ahead of schedule, and it just announced its first order for such a system from India's Centre for Development of Advanced Computing, with an $8.4 million purchase price. Rigetti's 108-qubit system boasts very fast gate speeds of 50 to 70 nanoseconds, which is incredibly fast, but its 108-qubit system only has a median two-qubit gate fidelity of 99%, which means it's less accurate than other, lower-speed systems.
Because quantum computing is still such a new field, investors should expect at least several more years of unprofitability from Rigetti as the company leans heavily into R&D to make its quantum chips faster and more accurate. However, with a share price more than 50% off its high, it's one of the best -- if still very risky -- pure-play quantum picks around.
2. IonQ: The most accurate quantum around
One drawback to quantum computing is its inherent inaccuracy. I mentioned earlier that Rigetti's 108-qubit system had a median two-qubit gate fidelity of 99%, which might sound very accurate. And it would be, if you were talking about a basketball player's 3-point accuracy or a baseball player's batting average. But in the world of computing, where a normal computer performs billions (if not more) of computations per second, 99% accuracy would be laughably error-prone.
In October, however, quantum computer company IonQ (IONQ 3.47%) announced it had achieved two-qubit gate fidelity of 99.99%. IonQ's technology creates qubits by using lasers to trap ions. These trapped-ion qubits can operate at higher temperatures than standard qubits made using superconductors. That allowed IonQ to slightly raise the temperature of the gates to reduce the need for slow cooling. However, the trade-off for the higher accuracy is a slightly lower speed.
NYSE: IONQ
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With trailing-12-month (TTM) revenue of $79.8 million and a market cap of $17.1 billion, IonQ is the largest of the pure-play quantum computing companies and offers full quantum computer systems as opposed to just quantum chips. If it can maintain its systems' accuracy while boosting speed, it should end up as one of the big winners of the quantum race over the long term. But that's a very big "if." All the research and development (R&D) expenses have ballooned IonQ's TTM net loss to $1.5 billion, so while it's a good choice for a speculative quantum computing play, investors should understand the risks and be prepared to wait through years of volatility.
3. Alphabet: The big guns
Both Rigetti and IonQ are so risky and speculative because the quantum computing industry is still in its infancy, and there's no guarantee that either of them will end up as one of the winners in the field. What if investors don't want to wait through years of volatile share price swings? Is there a viable option out there?
NASDAQ: GOOGL
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Maybe not a pure-play option, but when it comes to quantum computing, you can't get much more advanced than Google parent Alphabet (GOOG 1.68%) (GOOGL 1.66%), which has been making big investments in quantum computing since 2012. In 2022, Google spun off a big chunk of its quantum computing division as SandboxAQ, which isn't publicly traded. But the parent company retained enough of its Google Quantum AI to roll out its Willow quantum chip in late 2024, which was so powerful it could perform a computation in less than five minutes that would take a cutting-edge supercomputer 10 septillion (a one followed by 24 zeroes) years to complete.
Google still devotes plenty of time and resources to developing hardware and software systems for quantum computing, and is likely to be one of the major players in the quantum computing industry for years to come, even though nearly all of its revenue comes from elsewhere in the company.
