Investing in the Future of Quantum Computing: Stocks to Watch Now

Key Points

• The race for quantum computing is starting to pick up the pace, and investors need to understand what quantum computing actually does before looking to invest.
• Three stocks are at the front and center of this revolution, offering double-digit upside and new institutional inflows.
• A worthy mention in the race also brings investors an attractive risk-to-reward setup at the current level.

Computers have changed pretty much every aspect of everyone’s life, and quantum computers will do the same in the coming years. Breakthroughs in a new theme for the technology sector, quantum computing, are taking investors by surprise in how quickly it is being developed and now rolled out into the media, as the first machines are already up and running. The question is, what does it mean for the future, and who is involved in this amazing race to the next frontier?

The answer is anyone interested in cybersecurity, artificial intelligence, and even economics. Those who don’t want to see Silicon Valley become the next rust belt will have to step up their development process, which is why investors should keep today’s list close to their chest for the coming years. It can significantly change their financial futures.

Stocks involved in this new revolution include names like Alphabet Inc. NASDAQ: GOOGL, Microsoft Co. NASDAQ: MSFT, and even Amazon.com Inc. NASDAQ: AMZN, and these are the stocks that will make the foundation of today’s list. However, investors now have the task of figuring out which stocks in the lateral supply and development chain will also be called upon to aid in the quantum computing revolution, which is why there’s another worthy mention at the end.

How Does Quantum Computing Even Work?

These computers don’t operate on transistors and semiconductors alone, which is how today’s computers work fundamentally. Quantum computers operate on atoms, which is what gives them their superiority above anything that investors know of today; since atoms can be in multiple places at the same time, these computers can make infinite calculations and simulations simultaneously.

This is what some in the industry are calling “Quantum Supremacy,” something that Google has already made breakthroughs in. They announced their very own computer named Willow at the beginning of November 2024. What most investors will miss is the fact that the energy necessities to keep running—and developing—these computers will be another great trend in this race.

This puts Google in a unique position to drive not only quantum computing advancements but also the supporting infrastructure required to sustain these systems. Their ability to innovate in energy management and scalable computing solutions could redefine industry standards and unlock new revenue streams.

This is why Amazon has been investing in nuclear energy, as it is related to quantum computers in more ways than just providing an energy source. Since these computers run calculations on atoms, and nuclear energy runs on the same foundational concepts, the issue of scaling and commercializing nuclear energy could be solved soon.

Amazon’s investment suggests a strategic bet on the convergence of quantum computing and nuclear energy. If breakthroughs in atomic-level control from quantum computing spill over into nuclear energy, it could reshape how power is generated and managed, positioning Amazon as a pioneer in both industries.

Then, there is the corporate and economic solution. While Microsoft revolutionized the world of finance through its Office software suite, its developments in quantum computing could solve the most complex financial issues and theories in the market, the type of software that every major financial firm will want to have access to.

This could lead to a new era of financial technology, where quantum-powered analytics redefine risk assessment, portfolio optimization, and real-time market forecasting. Microsoft’s quantum computing advancements might become indispensable tools for global financial institutions, driving demand for cutting-edge financial software solutions.

Wall Street knows the potential in this trend, so it has kept a double-digit upside view on these stocks. For Google, Pivotal Research has kept its Buy rating, pushing for a $225 share price target today, implying that there is up to 17% upside from where the stock trades today.

When it comes to Amazon, some institutions can’t get enough of the stock. As of November 2024, Geode Capital Management, Franklin Resources, and Toronto Dominion Bank all boosted their holdings in Amazon stock to end the year. And it makes sense, as analysts at TD Cowen now see it going to $265 a share, a 15.5% run from today’s price.

A Worthy Mention in This Race

Recently, shares of Intel Co. NASDAQ: INTC may have popped up on the radars of several investors, not only because of how low it trades today, which is 40% of its 52-week high but also because the broader markets are willing to value it right along with other competitors on valuation multiples.

This article will break down many of the reasons why this valuation situation might be so, but investors need focus on the main issue for Intel. Quantum Computing is not just a race in the United States; the whole world is after developing this technology, so keeping this intellectual property in-house will be key.

That’s where Intel stock comes into play, as the company is quickly building its presence for manufacturing wafers and semiconductors in Arizona and Ohio, and also the one receiving most of the government grants to do so. Regarding securing the country’s spot in this race, it looks like Intel stock might be the one to be looking at today.

Wall Street analysts would agree. They currently have a price target set on $30 a share for Intel stock, calling for up to 50% upside from where it has fallen today.