Quantum computing could grow to become a $100 billion market by 2035, according to McKinsey estimates, and tech companies of all shapes and sizes are trying to position themselves to grab hold of it now.
But while the smaller quantum computing stocks get most of the attention, the legacy tech giants are quietly making big strides in this space. Here's why Nvidia (NVDA +1.73%), Alphabet (GOOGL +0.66%)(GOOG +0.41%), and Amazon (AMZN +0.55%) are some of the best quantum computing stocks to buy right now.
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1. Nvidia wins no matter which quantum computing tech takes off
Nvidia isn't the obvious quantum computing play, but it deserves to be on this list. Many quantum computers work in tandem with traditional computers to improve error correction and speed up certain processing. These hybrid systems could be the future of computing, and Nvidia is already at the center of it.
The company's CUDA-Q platform serves as a bridge between quantum and traditional computing and has become a critical part of these systems, with an estimated 75% of quantum computing companies using it.
Nvidia has also made some early investments in quantum computing companies through its venture arm, NVentures. The company has invested at least $1.8 billion in quantum computing technologies, including trapped-ion, neutral-atom, and photonic quantum computing, helping spread its bets across whichever technology becomes the dominant player.
And don't forget that artificial intelligence (AI) systems are likely to play an important role as quantum computers develop, which means that as tech giants invest further into AI and quantum computing, they'll likely be using Nvidia's processors and CUDA platform to run them.
NASDAQ: NVDA
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2. Alphabet is making big strides with its tech and could see cloud benefits
Alphabet isn't the flashiest quantum computing stock, but there are some excellent reasons why it could be a top quantum computing stock over the coming years. The first is that late last year, Alphabet released the first-ever algorithm for verifiable quantum advantage, which completed a task 13,000 times faster than a classical supercomputer. That move helped show Alphabet isn't just dabbling in quantum computing but actually developing advanced tech that could soon have real-world benefits.
The company has also developed its own quantum computing processor, called Willow, that Alphabet says can dramatically reduce the error rates for quantum computing. The company's progress means it has reached its third milestone in quantum computing out of six, with the eventual goal of building a large, error-corrected, 1 million-qubit quantum computer.
Alphabet has a built-in advantage if its quantum computing hardware takes off because the company is also the third-largest cloud computing player, with 14% market share. Alphabet is already establishing itself as a leading AI company, and its enterprise customers could quickly adopt its quantum computing platform in the near future, too.
Alphabet CEO Sundar Pichai is already betting on the company's eventual dominance in this space, saying that quantum computing is currently at a stage of development similar to where AI was just five years ago.
NASDAQ: GOOGL
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3. Amazon's cloud dominance could come in handy
Amazon has been off investors' radar for a while, with its shares lagging the S&P 500 over the past year. But the company has substantial potential to benefit from quantum computing in the coming years with help from its cloud computing company.
Amazon Web Services (AWS) has 28% of the cloud computing market and is highly profitable, with the business generating 57% of Amazon's total operating income last year. And the company is already monetizing quantum computing through its Amazon Braket service, which enables customers to access quantum computing capabilities via AWS.
Amazon is also a significant investor in quantum computing start-up IonQ, holding a $36.7 million stake in the company, and IonQ is already a part of Amazon's AWS quantum computing services. What's more, Amazon is also building its own quantum computing hardware, including its Ocelot processor, designed to reduce error correction by up to 90%.
With quantum computing and cloud services likely to be intertwined for years and Amazon already taking a larger role combining its hardware and AWS services, the company is well-positioned to benefit from quantum computing's growth in the years ahead.
