Quantum computing stocks have emerged as one of the hottest investment themes of 2024, with the Quantum Challenge ETF(NASDAQ: QTUM) soaring 49.4% year to date, almost doubling the S&P 500a solid increase of 24.3%. Although widespread commercial quantum computers could take years to develop, major technological advances have sparked an early rush to what many see as the next computing revolution.
The excitement is not just speculative hype. Quantum computing achieve two groundbreaking milestones in 2024, suggesting we are approaching a technological turning 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 increased exponentially. This breakthrough solves a challenge that has stymied researchers for almost 30 years. Even more impressively, Willow completed a benchmark computation in less than five minutes that would require today's fastest supercomputers 10 septillion years to solve – a time span far greater than the age of the universe.
Meanwhile, Infleqtion started quantum computing, working with Nvidia(NASDAQ: NVDA)has achieved another first by demonstrating a practical materials science application using logical qubits. This breakthrough, which delivered a 6x boost in computational accuracy, hints at the potential of quantum computing to revolutionize everything from battery technology to superconductors.
Although quantum computing is still in its infancy, these early developments, 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 boost your portfolio in 2025 and beyond.
Leader of trapped-ion quantum computing IonQ(NYSE: IONQ) has emerged as one of the notable quantum computing stocks of 2024. The company's new method uses ionized atoms as the heart of its quantum systems, enabling longer and more sophisticated calculations with fewer errors than competing methods. The IonQ platform integrates with all major cloud providers and supports multiple programming languages, making quantum computing very accessible to developers and researchers.
The company's competitive advantages come from deep academic roots in ion trap technology spanning over 25 years of research and proven commercial traction through government and enterprise 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 stock gain of 258.5% in 2024, the company remains unprofitable and faces significant technological 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 tech giants and other quantum businesses and the potential for technological obsolescence are key risks to IonQ's market position.
While IonQ's valuation may seem steep after its stellar run in 2024, with shares trading at nearly 250 times sales, the company's growing commercial momentum, expanding quantum networking business, and a strong balance sheet of $382.8 million on the end of the most recent quarter puts it in pole position to capture a significant share of what could become the multi-million dollar quantum computing market. For investors with a high risk tolerance and a long-term horizon, IonQ offers pure-play exposure to one of technology's most promising frontiers.
Pioneer of quantum computing Computing Disposal(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 capability allows for 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 increase in quantum performance. Rigetti's strategy focuses heavily on scalability through modular chip design that allows building larger quantum systems from smaller, identical components. The company has also built strong partnerships across government, research and commercial sectors.
However, like other quantum companies, Rigetti faces major technological hurdles and remains unprofitable. The stock's 851.2% surge in 2024 and a valuation of 130 times sales indicates that 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 interesting pure-play option for investors seeking exposure to superconducting quantum computing technology.
Although tech giants such as Alphabet and Nvidia have made great strides in quantum computing, their huge market capitalization means that quantum advances are likely to have a minimal impact on their stock prices. Pure-play quantum companies like IonQ and Rigetti offer more direct exposure to the technology's potential, albeit with 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.
Given the early stage and technical complexity of quantum computing, however, many investors may prefer a more diversified approach. The Defiance Quantum ETF offers just that, balancing pure-play quantum stocks with established technology leaders who are advancing the technology. With quantum computing potentially approaching an inflection point, investors now have several ways to position themselves for what could become one of the most transformative technologies of our time.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. George Buddwell He has positions at IonQ and Nvidia. The Motley Fool has rankings and recommends Alphabet and Nvidia. The Motley Fool has a disclosure policy.
