Quantum computing has taken a step back in popularity over the past few months. After peaking in interest in October, many quantum computing stocks have sold off a healthy amount.
However, since quantum computing hype is at a relative low, now is the time investors should consider scooping up shares. But this doesn't mean going out and buying the stocks of every quantum computing pure play on the market. There will be a lot of busts from that sector, and investors must keep a balanced approach.
By also choosing stocks of legacy tech companies competing in quantum computing, investors can generate great returns while still ensuring they aren't taking on too much risk. I think approaching quantum computing in this way is a smart move. If you've got $3,000, investing $1,000 in each of these stocks could be wise.
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Alphabet
Alphabet (GOOG 1.69%) (GOOGL 1.66%) is a major player in the quantum computing realm. It has resources the pure plays can only dream of, and it is delivering strong quantum computing results. Its Willow chip is one of the more accurate options available and is already delivering real-world application success. That's a major hurdle in the quantum computing realm, and if Alphabet can prove its relevance before anyone else does, it will be a massive winner.
NASDAQ: GOOGL
Key Data Points
One nice benefit of investing in Alphabet is that you get the upside of quantum computing, alongside a massive winner in the generative artificial intelligence (AI) arena. Alphabet's generative AI model Gemini has emerged as one of the best available and could be the ultimate market winner years down the road. Even without that, Alphabet has a strong ad business with Google Search.
All this adds up to a very balanced investment, making Alphabet a great cornerstone stock to build a portfolio around.
Nvidia
Nvidia (NVDA 1.53%) is highly exposed to the AI buildout, as its graphics processing units (GPUs) are the top computing option available right now. There will be trillions of dollars spent on Nvidia products in the course of the AI buildout, leading to a huge amount of infrastructure that could be toppled by quantum computing.
However, most experts in the industry believe that the most successful use of quantum computing will be in a hybrid environment, where quantum computers work alongside traditional accelerated computing units to provide the best results.
NASDAQ: NVDA
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With Nvidia's products being the leading traditional computing units, interfacing with these devices is key. So Nvidia launched the NVQLink, which allows a quantum computer to plug into existing computing networks. This is a big deal and ensures that Nvidia's products will still be used even after quantum computing becomes a mainstream offering.
Nvidia will stay relevant for years to come, making it an excellent stock to buy now.
IonQ
Lastly is IonQ (IONQ 3.47%). IonQ is a pure play and has no backup plan, which inherently makes IonQ a risky investment, but the rewards could be high if it pans out.
The reason I'm most bullish on IonQ for winning the quantum computing arms race is its approach. While most competitors are using the superconducting approach, IonQ is deploying the trapped-ion approach. These two techniques are very different, and each has its pros and cons. For trapped ion, one of the primary benefits is increased computing accuracy, but this comes at the cost of computing speed.
NYSE: IONQ
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IonQ has the world's most accurate quantum computer, more than 10 times more accurate than the nearest competitor. That's a huge lead that will be difficult to make up for many competitors, which is why IonQ is my top quantum computing stock pick.
Still, it doesn't have the funding that a larger competitor like Alphabet has, so it may not prevail in the end, which is why I think taking a balanced approach to this industry is a wise idea.
