Although artificial intelligence (AI) investing steals most of the spotlight, there's another upcoming technology that will drive another investing rush: quantum computing. Quantum computing has the potential to provide several amazing breakthroughs, and the companies that dominate this sector will see major growth and huge returns for investors.
This isn't some fly-by-night technology; major tech companies and start-ups alike are trying to bring the best product to market and establish themselves as the go-to quantum computing provider, similar to how Nvidia (NVDA +2.66%) did with its graphics processing units (GPUs) in the AI build-out.
Two names that often come up in this area are Alphabet (GOOG +0.67%) (GOOGL +1.09%) and IonQ (IONQ 1.15%). This is a David-and-Goliath matchup, as Alphabet has significant resources, while IonQ is starting from scratch. Still, IonQ has a great product that's turning a lot of heads, but which is the better bet? Let's take a look.
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IonQ and Alphabet are taking different approaches to quantum computing
There isn't one established way to do quantum computing, which is why there are so many competitors in the space. The most popular type of quantum computing is known as superconducting, which involves cooling a chamber to near absolute zero, then utilizing a particle within that chamber to perform calculations. Alphabet employs this approach and is actively working on improving its scale and accuracy.
Those represent two of quantum computing's biggest problems, as quantum computers aren't nearly as accurate as traditional computing and don't yet have the scale needed for commercial solutions.
NYSE: IONQ
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As a result, IonQ is taking a different approach that helps it solve these problems. It uses something called a trapped ion technique, which utilizes a laser to cool a particle, then it traps the particle to a surface maze to perform quantum computing calculations. This is far more accurate than supercomputing, but it comes at a cost: speed. IonQ's processor speeds are far less than its superconducting counterparts, but if it's more accurate, then this balances out.
Right now, IonQ holds the world record for two-qubit gate fidelity, a common measure for quantum computing companies. It scored a 99.99% as of last October -- a mark that still hasn't been beaten. Google's score at the last report was 99.88% for engaging gates, but it did it at a much faster speed. That extra 0.01% is a big deal in quantum computing, so IonQ's lead appears to be real, but Alphabet will be coming after IonQ's score.
Still, I think this shows that IonQ could be a viable pick, but it does have an uphill battle.
Alphabet can self-fund its quantum business
The biggest difference between these two is funding. IonQ has no core business to fund its operations; it must sign research contracts to do so. As of now, IonQ's quantum business isn't sustainable, and it celebrates single-system sales as signs of progress.
Alphabet clearly has a strong core business, with its Google family of products generating mountains of cash. It is using a large chunk of that cash to build out its AI computing footprint, but the company can easily redirect it to quantum computing if it sees a compelling opportunity. Quantum computing is a cash-intensive field, and this easily gives Alphabet a leg up on IonQ.
NASDAQ: GOOGL
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So, which company is the best buy? I think they are both great picks, but they represent different risk levels. Alphabet will likely succeed in the quantum arena and produce a viable product, making it an easy bet. IonQ is more of a long-shot bet, but if it does work out, it will make investors a ton of money. If you're more inclined toward higher risk, buy IonQ. If you're more conservative or don't want to deal with a stock that could go to $0, then Alphabet is the better pick.
However, owning both is the smart move, as it gives exposure to multiple varieties of quantum computing.
