Quantum computing stocks have emerged as one of the hottest investment themes of 2024 Defiance Quantum ETF (NASDAQ: QTUM) up 49.4% year to date, almost doubling S&P500‘s robust gain of 24.3%. While widespread commercial quantum computers may take years to develop, major technological breakthroughs have led to an early rush toward what many see as the next computing revolution.
The excitement isn’t just speculative hype. Quantum computing has reached two groundbreaking milestones in 2024, indicating that we are approaching a technological tipping point.
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) made history with its Willow quantum computing system, which demonstrated the ability to reduce errors as the number of qubits increases exponentially. This breakthrough solves a problem that has plagued researchers for almost thirty years. Even more impressive, in less than five minutes, Willow completed a benchmark calculation that would take today’s fastest supercomputers 10 septillion years to solve – a time span far greater than the age of the universe.
Meanwhile, quantum computing startup Infleqtion is working with Nvidia (NASDAQ: NVDA)achieved another first by demonstrating a practical materials science application using logic qubits. This breakthrough, which delivered a sixfold increase in computing accuracy, signals the potential of quantum computing to revolutionize everything from battery technology to superconductors.
Although quantum computing is still in its infancy, these early breakthroughs, spurred by tech giants Alphabet and Nvidia, suggest that we may be on the cusp of a computing revolution. Two companies are pioneering this transformative technology that could boost your portfolio in 2025 and beyond.
Leader in the field of trapped ion quantum computers IonQ (NYSE: IONQ) has become one of the standout quantum computing stocks of 2024. The company’s new approach uses ionized atoms at the heart of its quantum systems, enabling longer and more advanced calculations with fewer errors than competing approaches. IonQ’s platform integrates with all major cloud providers and supports multiple programming languages, making quantum computing highly accessible to developers and researchers.
The company’s competitive advantages stem from deep academic roots in ion trap technology spanning more than 25 years of research and proven commercial traction through government-industry partnerships. IonQ has also expanded into quantum networks, working at the intersection of quantum computing and the future quantum internet.
However, despite IonQ’s impressive share gain of 258.5% through 2024, the company remains unprofitable and faces significant technology and commercialization risks. The quantum computing industry is still in its early stages, with uncertain timelines for achieving practical advantages over classical computers. Competition from technology giants and other quantum startups and the potential for technological obsolescence pose significant risks to IonQ’s market position.
While IonQ’s valuation may seem high after its stellar run in 2024, with shares trailing sales by nearly 250 times, the company’s growing commercial momentum, expanding quantum networking business and strong $382.8 million balance sheet at the end from the most recent quarter put the company in pole position to capture a significant share of what could become a multibillion-dollar quantum computing market. For investors with a high risk tolerance and a long-term horizon, IonQ offers pure exposure to one of technology’s most promising frontiers.
Pioneer in the field of quantum computers Rigetti computers (NASDAQ: RGTI) takes a fundamentally different approach to quantum computing than IonQ, using superconducting circuits instead of trapped ions. The company’s vertically integrated strategy includes Fab-1, the industry’s first dedicated quantum foundry, giving Rigetti control over the entire quantum chip development process. This in-house manufacturing capacity enables rapid innovation cycles and helps protect against supply chain risks.
The company’s latest Ankaa quantum processor architecture has achieved 98% two-qubit gate fidelity, marking a significant advance in quantum performance. Rigetti’s strategy is strongly focused on scalability through a modular chip design that allows larger quantum systems to be built from smaller, identical components. The company has also built strong partnerships in the government, research and commercial sectors.
However, like other quantum companies, Rigetti faces major technological hurdles and remains unprofitable. The stock’s 851.2% increase in 2024 and its valuation of 130 times sales indicate that investors are pricing in significant future growth potential. Still, Rigetti, with its integrated manufacturing approach, improved quantum performance metrics and clear technology roadmap through 2025, offers an intriguing pure-play option for investors seeking exposure to superconducting quantum computing technology.
While tech giants like Alphabet and Nvidia have made significant progress in quantum computing, their huge market capitalizations mean that quantum breakthroughs are likely to have minimal impact on their stock prices. Pure-play quantum companies such as IonQ and Rigetti offer more direct exposure to the technology’s potential, albeit at significantly higher risk. Each represents a different technological approach – trapped ions versus superconducting circuits – and both could emerge as winners in what could become a huge new computing market.
However, given the early stage and technical complexity of quantum computing, many investors will prefer a more diversified approach. The Defiance Quantum ETF offers just that, balancing pure quantum stocks with established technology leaders driving technology forward. With quantum computing potentially approaching a turning point, investors now have multiple ways to position themselves for what could become one of the most transformative technologies of our time.
Before you buy shares in IonQ, consider the following:
The Motley Fool Stock Advisor The analyst team has just identified what they think is the 10 best stocks for investors to buy now… and IonQ wasn’t one of them. The ten stocks that survived the cut could deliver monster returns in the coming years.
Think about when Nvidia made this list on April 15, 2005… if you had $1,000 invested at the time of our recommendation, you would have $825,513!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including portfolio building guidance, regular analyst updates and two new stock picks per month. The Stock Advisor is on duty more than quadrupled the return of the S&P 500 since 2002*.
View the 10 stocks »
*Stock Advisor returns December 16, 2024
Suzanne Frey, a director at Alphabet, is a member of The Motley Fool’s board of directors. George Budwell has positions in IonQ and Nvidia. The Motley Fool holds positions in and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.
2 Quantum Computing Stocks That Could Boost Your Portfolio was originally published by The Motley Fool
