Are these the best quantum computing stocks to watch?

Trading in quantum computing stocks

Quantum computing is the latest ‘final frontier’ of technology – a new era of machine problem solving in which computers use quantum mechanics to operate.

Now, quantum computing looks set for even more growth. For example, legendary quantum computing forerunner D-Wave Systems Inc. will finally go public via SPAC soon.

But, how best to trade in this growth area, which is as mysterious as it is popular? Appropriately, no one knows what quantum computing will eventually look like. However, here are some preliminaries to know:

• Quantum computing stands to become a revolutionising technology, comparable to the first digital computers in their ability to transform the tech landscape
• While breakthroughs have occurred, it may still be years before quantum computers are usable on a large and meaningful scale
• This means quantum stocks should be seen as having an investment horizon of a decade or possibly even more
• Pure quantum computing players are difficult to find, as many of the most promising ones are start-ups not yet accessible to normal investors
• However, several large legacy tech firms (like IBM) are also getting involved. Because these are publicly traded and have the benefit of not relying solely on the success of quantum, this mitigates some of the risk of trading in quantum

Want to get involved in quantum computing stocks? You can trade in our top stock picks, as well as many other shares, by opening a live account with us.

7 quantum computing stocks to watch

1. Google (Alphabet Inc.)
2. IBM
3. Amazon
4. Honeywell
5. IonQ
6. NVIDIA
7. Microsoft

Google (Alphabet Inc.)

One of the highest profile players in the quantum computing space is Alphabet’s Google. Google Inc. announced in 2019 that they had attained ‘quantum superiority’. In other words, its quantum processor, Sycamore, had successfully performed its first-ever function beyond the capabilities of classical computers.

However, this was soon questioned by IBM, who claimed that the same problem could be solved by a standard computer – just over the space of days, compared to Sycamore’s mere minutes.

Then, in the second half of 2020, a smaller version of Sycamore reached another milestone – performing its first quantum chemistry reaction.

In May 2021, Google opened its new Quantum AI Campus in Santa Barbara, California, along with a new goal: to build the world’s first ’useful, error-corrected quantum computer’ by 2029. ¹

Google has even, to a certain extent, opened this effort up to the public in collaboration, when it announced Quantum Computing Service in December 2021. This allows approved customers the opportunity to send their own computing programs to Google to be run on their quantum computing hardware at the lab in Santa Barbara.

With this kind of computing power, Google is hoping to solve problems humanity hasn’t been able to for centuries. Some of these include developing better medicines, solving world hunger and climate crises. However, this is a long way off for now.

The only recent news regarding Google and quantum computing has been speculative. For example, there have been rumours that Google Inc. may or may not take Sandbox, its secretive quantum department unrelated to its quantum AI campus, public. However, nothing concrete has been confirmed and it could be years before any further tangible quantum milestones are reached.

Trade on Alphabet shares

IBM

Computing giant IBM is considered one of the true forerunners in quantum. Back in May 2016, IBM made Quantum Experience, its first five-qubit quantum processor, available to users via the cloud.

Then, in 2017, IBM performed a quantum-chemistry simulation using six qubits and also released the first 17-qubit quantum computer. In 2019, it followed up with the IBM Q System One, which it claimed was the world’s first commercial quantum computer.²

The year 2021 was a watershed year for IBM in the quantum space. It announced at its Quantum Summit that it plans to ‘deliver quantum advantage’ – having quantum computers solve problems a traditional computer couldn’t in any length of time – by sometime in 2023. Then, in November, IBM Quantum introduced the world to ‘Eagle’, the first quantum computer with processing power larger than 100-qubits, making it the largest developed up until now.³

Not long afterwards, it was revealed that US government contractor Raytheon Technologies was partnering with IBM to use its quantum tech for the development of defence, military intelligence and more.

Trade on IBM shares

Amazon

Amazon is a more recent addition to the quantum computing race. In October 2019, Amazon Web Services (AWS), a division for research and development of quantum computing algorithms and hardware within the company, opened the AWS Center for Quantum Computing.

In August 2020, the cloud-based AWS launched Amazon Braket, a quantum computing ‘service’ generally available to developers and researchers.

Amazon has no quantum computing inventions of its own. Instead, it’s acting, true to form, as a kind of ‘quantum platform’ for now, bringing quantum technological breakthroughs, research and academics together. As such, Braket makes use of a number of up-and coming quantum companies’ technologies, including hardware and devices from IonQ, quantum pioneer company D-Wave and quantum start-up Rigetti.

This may change, however. Currently, Amazon has said that it’s working on what it calls a ‘a fault-tolerant quantum computer’, which essentially would mean error-free quantum computing.⁴ It’s also aiming for developing the first mass-produced quantum computers at some point.

The good news is that investing in Amazon for quantum’s sake may well be lucrative. At the beginning of February, the company released its latest results to widespread positivity, with its share price rising 15% that day. Much of this was thought to be due to enthusiasm for AWS’s cloud quantum capabilities going forward. As it stands currently, the cloud service already counts prestigious companies like the Volkswagen Group and the Institute for Quantum Computing, plus scores more, among its client base.⁵

Trade on Amazon shares

Honeywell

Honeywell Quantum Solutions is a former department of American company Honeywell International Inc., a technology, construction and aerospace conglomerate.

Like Google, it’s a company known for having several more experimental technological divisions as offshoots to its core business, including robotics, AI and more. As a result of its quantum dealings, Honeywell announced in early 2020 that it had developed its own quantum computer, based on a unique trapped ion technology and boasting a quantum volume of 64 or more, which it called the world’s most powerful quantum computer at the time.⁶

Honeywell (as well as IonQ) use a different method to quantum computing compared to Google and IBM, known as trapped ion quantum computing. This doesn’t require the cryostats or super-cold environments and instead aims at developing a quantum computer that operates at room temperature.

Now, Honeywell’s quantum capabilities have their own company: Quantinuum. In November 2021, Honeywell announced that it was merging its quantum computing unit with fellow quantum software outfit Cambridge Quantum, to create the new company. Quantinuum is now, according to Honeywell, ‘the world’s largest, most advanced standalone quantum company.’ ⁷
Quantinuum has wasted no time since then, bringing out its first product, a cybersecurity tech powered by quantum computing known as Quantum Origin, in January 2022. The release was met with widespread positivity, with some even calling it the first truly useful application of quantum computing.

Honeywell Inc itself has also announced, in its latest earnings season results, that it plans to sink significant capital into building more quantum computers. It added that it expects Quantinuum to achieve the milestone of $2 billion in sales by 2026.⁸

Trade on Honeywell shares

IonQ

Start-up IonQ made history in 2021, when it became the very first-ever publicly traded quantum computing company. The business went public via special purpose acquisition company (SPAC), amid much fanfare, on the New York Stock Exchange in October 2021.

Since then, IonQ has seen some exciting volatility. At its most dramatic moments, the company has seen share prices climb by more than 300% from around $8 to about $35. In fact, according to Simply Wall Street, as of late February 2022 the company’s revenue has skyrocketed by almost 800% in the past year.⁹

Unlike Google, IBM or Amazon, IonQ is what’s known as a ‘pure play’ company, meaning that its core (and only) business is quantum computing.

IonQ was started in 2015 and builds its own quantum computers. Like Honeywell, it uses an approach called trapped ion quantum computing, which does not require super-cold environments to be able to function.

In December 2018, IonQ burst onto the quantum scene with the world’s first commercial trapped-ion quantum computer. Then, in October 2020, it announced a new 32-qubit quantum computer.

The company looks set to expand practical applications of the quantum space in 2022. Earlier in the year, the company announced a new strategic partnership with the Hyundai Motor Company to explore quantum computing’s implications for car batteries.¹⁰ This could be a major driver for growth at IonQ, but likely only over the long term.

Trade on IonQ shares

NVIDIA

Device maker NVIDIA has been in the tech game and making devices since the early 1990s. It’s most famous for inventing the graphics processing unit (GPU) chip used in traditional computers. However, for the past few years, they have been closely aligning themselves with major players in the quantum computing space too.

This is perhaps not as big a stretch for the company as some might imagine. Many experts are predicting that quantum capabilities will not completely replace classical computers – or at least not for some time yet – but will instead be used in tandem with them to accelerate their capabilities. This makes quantum computers a potential natural successor to GPUs.

NVIDIA have been acting accordingly – not with their own quantum computers, but as an ally. In October 2020, the company released a presentation showing quantum’s near-future applications using GPUs. Then, in November 2021, NVIDIA used its own supercomputer to run the biggest simulation of a quantum algorithm attempted up until that point, again using their own GPUs.¹¹

In the same month, it announced the ‘cuQuantum software development kit’, in collaboration with IBM and Google’s Quantum AI, to help expedite quantum computing research and development. As of early 2022, NVIDIA’s cuQuantum is now publicly available, and consists of libraries and tools designed to accelerate quantum computing workflows, using NVIDIA technology.

Although NVIDIA’s near-term plans for its entanglement with quantum are unknown, the market has reacted favourably so far. Its 2021 year-end results boasted record-high revenues of over $7 billion, up more than 50% from the previous year. This seems to suggest that NVIDIA will continue to be one to watch in the quantum stakes.

Trade on NVIDIA shares

Microsoft

Microsoft needs no introduction, and the tech giant has been hard at work for over five years providing software solutions for the quantum computing space. This is done through its own internal division called Microsoft Quantum.

As early as 2017, the company announced a new programming language designed for quantum computing, plus the Microsoft Quantum Development Kit. This kit aimed at providing software and its new quantum-focused programming language to help further the testing and development of quantum computing breakthroughs.

It also announced a new eventual goal – to develop the world’s first full stack quantum computing software solution. In May 2020, it realised this with Azure Quantum, a cloud-based platform designed for hosting software for fellow quantum partners of Microsoft like IonQ and Quantinuum, as well as for quantum hardware itself.

Azure Quantum then became available to the public in February 2022.

Microsoft plans to eventually build their own quantum computers, which will be fully integrated with Azure Quantum. They’re aiming at having more stable, scalable quantum hardware than what’s currently available, but have provided no tangible updates on this yet. As such, actual quantum machinery may be a long way off for Microsoft – even as it corners the quantum software market in the meantime.

Trade on Microsoft shares

How to trade in quantum computing stocks

With us, you can trade on quantum computing stocks by using CFDs. With CFDs, you won’t take ownership of the underlying company shares, but will instead speculate by going long or short on the stocks, making a profit or a loss depending on whether your prediction was correct.

Quantum vs classical computers

Quantum computing can be difficult to understand, but it’s certainly not ‘just another type of computer’. While traditional computers are powered by code, quantum computers are powered by very different principles: those of quantum mechanics.

Simply put, the computers we are used to run off of bits, ones and zeros used to formulate instructions in binary ‘languages’ that the computer can action. Quantum computers run off of qubits - subatomic particles like electrons or photons – instead. These are non-linear, and can be several things, performing several different non-binary functions, at the same time.

This means an exponentially greater amount of processing power, working memory and sophistication, in far less time, is available with quantum computing. Quantum computers can solve problems traditional and even supercomputers never could.

Because they’re a new field compared to classical computing, quantum machines currently have very different practical manifestations. For example, a simple quantum computer is about the size of a room. Many run so fast that they need cryostats, which cool them to near absolute zero temperatures, hundreds of degrees Celsius below zero, just to be able to function. This, however, is likely to change as the technology progresses – probably in quantum leaps and bounds.

Quantum computer usages

While the future implications are undoubtedly massive, no one is quite sure yet what quantum computing’s real-world applications will be and how they will progress technology in years’ time.

This makes it difficult for investors to separate hype, speculation and exaggerated claims from realistic (not to mention practical) expectations.

However, we do know that quantum computer applications will likely include:

• Machine learning and artificial intelligence
• Pharmaceutical design and development
• Traffic management and city planning
• Financial modelling
• Cryptography and cybersecurity
• Logistics optimisation

Quantum computer downsides

There are some catches to quantum computing, however, for all its upsides. Most notably, investors need to remember that, as a developing technology, quantum capabilities are extremely expensive to design, research and test and could take many years before providing significant returns.

Then, there’s the fact that quantum computers run off of qubits – and qubits are volatile, only staying in the state of ‘superposition’ they need to be in to perform quantum computing capabilities for very short periods of time.

This makes qubits susceptible to being interfered with and fragile, therefore prone to make errors in their computations. These errors then have to be corrected through the design of complex software algorithms – also an expensive and time-consuming undertaking.

These cautionary areas don’t necessarily mean that quantum computing is a bust, though – it simply means that the technology is new and has a way to go before early teething problems are solved.

Quantum computing stocks summed up

• Quantum computing is a huge growth area for investors and in general, promising to change our technological landscape forever
• These computers are thoroughly different from the binary coding nature of traditional computers and have the ability to perform many functions simultaneously, in a non-linear way
• However, quantum computing is still in its infancy, with key players such as IBM, Google, IonQ and Honeywell only making preliminary strides in the field
• For now, investors can gain exposure to the quantum space by trading on public companies making quantum breakthroughs
• With us, you can trade in quantum computing stocks via CFDs

Sources

¹ Google Quantum AI blog, 2021
² IBM, 2019
³ IBM blog, 2021
⁴ AWS Quantum Computing blog, 2021
⁵ Amazon Web Services, 2020
⁶ Honeywell, 2021
⁷ Honeywell, 2021
⁸ The Motley Fool, 2022
⁹ Simply Wall Street, 2022
¹⁰ IonQ, 2022
¹¹ NVIDIA blog, 2021