Quantum computing has been increasingly in the news, with the U.S. government reportedly in talks to take equity stakes in companies working in the field and tech heavyweights like Nvidia (NVDA) likewise making strategic investments.
We asked Seeking Alpha analysts Dilantha De Silva, Uttam Dey, and Tangerine Tan Capital what they thought was the best quantum computing stock play right now for investors.
Dilantha De Silva: I believe IonQ (IONQ) is the best pure-play quantum computing stock right now, given how the company is using a differentiated qubit technology (trapped ion) compared to many of its peers who use superconducting qubits. This technological differentiation has allowed IonQ to focus on developing quantum computers that operate at room temperature, which I believe could lead to long-term competitive advantages.
The industry-leading error correction overhead ratio reported by IonQ (13:1) is also a promising indicator. Another differentiator is how IonQ (IONQ) is focused on monetizing its quantum technology as is rather than waiting for a fully fledged quantum computer.
That said, I am concerned about the valuation of IonQ and the broad quantum computing sector, as valuations seem to have run past the economic reality facing this sector, with scaling-related technological challenges yet to be addressed.
Uttam Dey: The Nvidia (NVDA) NVQLink is a big step for the entire quantum compute ecosystem that bridges the technological gap between classical computing and quantum computing. We need both classical compute power and quantum chips to work together to solve business problems, and frameworks like NVQLink help orchestrate the distribution of workloads between classical compute environments and quantum environments.
Currently, IonQ (IONQ) and Rigetti (RGTI) are the only publicly listed quantum stocks that are official partners. And I would recommend IONQ. They have stable revenue generation goals and strong partnerships across the ecosystem. Their recently concluded Investor Day, along with the Oxford Ionic acquisition, put them on an accelerated path towards data center-scale quantum systems.
I also would not leave IBM (IBM) off the list. Under new management since 2020, IBM now looks radically different from the IBM we knew over the past two decades. IBM is rapidly moving towards emerging tech like AI and now quantum. They have a strong roadmap to deliver an enterprise-scale, 200-qubit, fault-tolerant computer within four years. The kind of vendor/customer partnerships they are forging with companies such as AMD (AMD), HSBC (HSBC), and Vanguard is putting them firmly ahead in the race for full-scale quantum commercial viability.
Tangerine Tan Capital: Right now, I see Alphabet (GOOG) (GOOGL) as being at the forefront of quantum computing. In Michel Devoret, currently Google’s chief scientist of quantum hardware, Alphabet has one of the most distinguished experts in the field of superconducting quantum computer architecture. Along with two others, Devoret received the Nobel Prize in physics this year for his research in quantum computing.
Another notable figure is Hartmut Neven, who currently heads the Quantum Artificial Intelligence Lab. This laboratory is a collaboration between NASA, Alphabet, and the Universities Space Research Association. Neven is also a pioneer of visual search for camera phones. Plus, Neven’s Law was named after him, which is like Moore’s Law for quantum computers.
As if that weren’t enough, Alphabet (GOOG) (GOOGL) also has Demis Hassabis, the CEO of DeepMind, in its ranks. Last year, Hassabis received the Nobel Prize in chemistry for his research in the field of AI.
Since I believe that management is one of the biggest factors influencing long-term success, I am convinced that these three people, with their world-class expertise, will achieve incredible results.
Given my belief that AI and quantum computing will be closely linked in the future, I don’t see any company that rivals Alphabet’s expertise in this area. Additionally, Alphabet’s core business generates extremely high cash flows, leaving smaller competitors, as well as larger ones such as IBM (IBM), with significantly less funding.
Among the smaller competitors in the field, IonQ (IONQ) is an interesting company because of its acquisition of Oxford Ionics, which could help solve its scaling problem. Quantinuum, which is backed by Honeywell (HON) and follows a similar approach to IonQ, is also quite interesting in my opinion.
But many of the other smaller competitors that have also profited from the quantum hype, such as Rigetti (RGTI), D-Wave (QBTS), and Arqit (ARQQ), are far behind Alphabet, IonQ, and IBM, in my opinion.
If Nvidia (NVDA) continues to expand its efforts in the quantum computing sector, they should also be kept in mind. Nvidia has probably demonstrated more than any other company in recent years how to quickly and effectively respond to new trends.