Quantum computing stocks have become one of the hottest investment topics of 2024, with the Challenge Quantum ETF(NASDAQ:QTUM) increasing 49.4% so far this year, almost doubling the S&P 500The solid gain of 24.3%. While the development of widespread commercial quantum computers could take years to develop, significant technological advances have sparked an early rush toward what many see as the next computing revolution.
The excitement is not just speculative hype. Quantum computing achieved two groundbreaking milestones in 2024, suggesting we are approaching a technological inflection point.
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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 challenge that has stumped researchers for nearly 30 years. Even more impressive, Willow completed a benchmark calculation in less than five minutes that would require today’s fastest supercomputers 10 septillions of years to solve, a time span far greater than the age of the universe.
Meanwhile, quantum computing startup Infleqtion, in collaboration with NVIDIA(NASDAQ: NVDA)achieved another first by demonstrating a practical application of materials science using logical qubits. This breakthrough, which marked a 6-fold increase in computational precision, hints at the potential for quantum computing to revolutionize everything from battery technology to superconductors.
While quantum computing is still in its infancy, these early advances, driven by tech giants Alphabet and Nvidia, suggest we could be at the dawn of a computing revolution. Two companies are pioneering this transformative technology that could supercharge your portfolio in 2025 and beyond.
Leader in trapped ion quantum computing IonQ(NYSE: IONQ) has emerged as one of the top quantum computing stocks of 2024. The company’s novel approach uses ionized atoms as the heart of its quantum systems, allowing for longer, more sophisticated calculations with fewer errors than competing approaches. IonQ’s platform integrates with leading cloud providers and supports multiple programming languages, making quantum computing highly accessible to developers and researchers.
The company’s competitive advantages come from deep academic roots in ion trap technology spanning more than 25 years of research and proven commercial traction through government and business partnerships. IonQ has also expanded into quantum networking, working at the intersection of quantum computing and the future quantum Internet.
However, despite IonQ’s impressive 258.5% stock gain in 2024, the company remains unprofitable and faces significant technological and marketing 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 represent key risks to IonQ’s market position.
While IonQ’s valuation may seem lofty after its stellar 2024 performance, with shares trading at nearly 250 times sales, the company’s growing business momentum, expanding quantum networking business, and a strong $382 balance sheet .8 million at the end of the most recent quarter put it 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 exclusive exposure to one of the most promising frontiers in technology.
Pioneer of quantum computing Rigetti Computing(NASDAQ:RGTI) takes a fundamentally different approach to quantum computing than IonQ, using superconducting circuits instead of trapped ions. The company’s vertical integration 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 capability enables rapid innovation cycles and helps protect against supply chain risks.
The company’s latest Ankaa quantum processor architecture has achieved a two-qubit gate fidelity of 98%, marking significant progress in quantum performance. Rigetti’s strategy focuses heavily on scalability through a modular chip design that allows larger quantum systems to be built from smaller, identical components. The company has also created strong partnerships between the government, research and commercial sectors.
However, like other quantum companies, Rigetti faces significant technological hurdles and remains unprofitable. The stock’s 851.2% rise in 2024 and 130x sales valuation indicate investors are pricing in significant future growth potential. Still, with its integrated manufacturing approach, improving quantum performance metrics, and a clear technology roadmap through 2025, Rigetti offers an intriguing option for investors seeking exposure to superconducting quantum computing technology.
While tech giants like Alphabet and Nvidia have made significant strides in quantum computing, their huge market capitalizations mean quantum advances will likely have minimal impact on their stock prices. Quantum-only companies like IonQ and Rigetti offer more direct exposure to the technology’s potential, albeit with considerably more risk. Each represents a different technological approach (trapped ions versus superconducting circuits) and both could emerge as winners in what could become a massive new computing market.
However, given the early stage and technical complexity of quantum computing, many investors may prefer a more diversified approach. The Defiance Quantum ETF offers exactly that, balancing pure-play quantum stocks with established technology leaders advancing technology. With quantum computing potentially approaching an inflection point, investors now have multiple ways to position themselves for what could become one of the most transformative technologies of our time.
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Alphabet executive Suzanne Frey is a member of The Motley Fool’s board of directors. George Budwell has positions at IonQ and Nvidia. The Motley Fool has positions and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.
2 Quantum Computing Stocks That Could Supercharge Your Portfolio was originally published by The Motley Fool
