Key Points
IonQ has been a hot investment in the quantum computing space, but the stock carries an expensive premium, and its tech is still unproven.
Microsoft has exposure to quantum computing, plus the safety of its massive and highly diversified tech business.
IBM is a leader in quantum computing across hardware, software, and whole computing systems.
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Quantum computing has seen a surge in investor interest over the past couple of years. That's for good reason.
Research from McKinsey & Company estimates that the quantum technology market could grow to be worth nearly $100 billion annually over the next decade -- and quantum computing will be the largest part of that market. Quantum computers store and process information in a fundamentally different way than the classical computers and digital devices we use today, which allows them to perform certain types of unusually complex calculations exponentially faster than even the most powerful traditional supercomputers.
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IonQ has been one of the most popular quantum computing stocks, but it trades at an expensive valuation given its limited success to date. Plus, it's a pure play on quantum computing, so there's a very low floor for the stock if the technology it is developing doesn't work out as hoped.
So, forget IonQ stock. Instead, if you're interested in investing in a quantum future, consider these two top-notch stocks as alternatives.
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This tech behemoth could develop and benefit from quantum computing
Microsoft (NASDAQ: MSFT) is a tech megacap that's highly diversified across software, cloud services, and artificial intelligence (AI). For Microsoft, quantum computing is simply one piece of a much larger puzzle. The company has developed a quantum processing chip that it believes could help it scale quantum computer systems to 1 million qubits. Today's biggest quantum computers have barely surpassed 6,000 qubits.
Additionally, Microsoft would likely benefit tremendously from adding quantum computing to its offerings. That technology could eventually help it unlock new capabilities across its cloud and artificial intelligence businesses. The company's deeply entrenched customer relationships via Azure cloud, Windows, and Microsoft 365 software would serve as an efficient channel for selling whatever innovations quantum technology might unlock.
The use of quantum computers today is still limited primarily to research. Widespread development of commercial applications and the machines to support them could take years. In the meantime, Microsoft has solid legacy businesses, pays a growing dividend, and has continued to ride current growth trends throughout its operation. Investors can buy the stock and wait for what may come in quantum computing.
This longtime tech giant is leaning heavily into quantum computing
International Business Machines (NYSE: IBM), or IBM for short, has had to evolve to stay relevant, and its quantum computing efforts are on course to become a big part of that evolution. The company has become a one-stop solutions provider, offering a mix of consulting services, hardware, and software to help companies adopt cloud computing, AI, and other modern technologies.
Today, quantum computing is a minor piece of IBM's business, but make no mistake, IBM is a leading quantum computing company. It is aggressively developing whole systems, hardware components, and software. Its open-source software development kit, Qiskit, has over 13 million downloads.
IBM's consulting services help it build deep-rooted relationships with enterprises. In these cases, quantum computing is yet another tool IBM can sell. While many pure-play quantum computing companies are just starting to generate meaningful revenue, IBM has already earned over $1 billion from quantum computing. Look for it to continue building on that base.
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Justin Pope has positions in Microsoft. The Motley Fool has positions in and recommends International Business Machines, IonQ, and Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
