10 Best Quantum Computing Stocks To Buy

In this article, we will take a look at the 10 best quantum computing stocks to buy.

Complicated and large-scale issues can be solved by quantum computers through the creation of multidimensional spaces in a variety of fields and applications, such as banking, transportation, chemicals, and cybersecurity. This is not possible for supercomputers as they process the information on a bit-by-bit basis. Although the world of quantum computing has been developing for the past two decades, the industry gained mainstream recognition on Wall Street when numerous companies that offered pure-play exposure to the industry became public in 2021. According to research by McKinsey, compared to 2020, funding for companies using quantum technology increased by more than twofold, reaching $1.4 billion in 2022.

However, it must be noted that the quantum computing industry is still in its infancy stage, and investments are being made in the research and development (R&D) of the technology. The advancement in the field of cloud computing has benefitted the quantum computing industry as it is making quantum computing capabilities more accessible to researchers and software developers. According to a report issued by Research and Markets, the size of the enterprise quantum computing market is expected to rise from an estimated value of $2.74 billion in 2022 to $11.45 billion in 2027. This would reflect a compound annual growth rate (CAGR) of 33.1%.

An Expanding Ecosystem

According to McKinsey, the field of quantum computing is advancing at a rapid pace and is on its way to achieving widescale commercial viability. Leading companies like Amazon.com, Inc. (NASDAQ:AMZN), Alibaba Group Holding Limited (NYSE:BABA), International Business Machines Corporation (NYSE:IBM), and Microsoft Corporation (NASDAQ:MSFT) have already launched their cloud services based on quantum computing. The leading management consulting firm adds that the chief information officer (CIO) and other leaders in prominent organizations are keeping an eye out on the news related to quantum computing and trying to incorporate this emerging trend into their growth strategies. It is widely believed that the industries that adopt this technology early will be able to reap benefits as early as 2030.

Quantum computing is also receiving a boost from the public sector in the form of higher funding. This is evident by the fact that China, the European Union, and the US have invested a  cumulative $23.5 billion in the advancement of quantum computing as of 2022. Based on the use cases found by McKinsey, the stake of quantum computing in the automotive, chemicals, finance, and pharmaceutical industries could be valued at around $300 billion to $700 billion. Experts think that in the pharmaceutical industry, quantum computing could significantly reduce the R&D time for new drugs and make the process more efficient. Some of the best quantum computing stocks in the market currently include NVIDIA Corporation (NASDAQ:NVDA), Intel Corporation (NASDAQ:INTC), and Microsoft Corporation (NASDAQ:MSFT).

Photo by Anton Maksimov juvnsky on Unsplash

Our Methodology

We have discussed the business fundamentals and growth strategies of these companies in addition to the analyst ratings. We have shortlisted some of the best pure plays in the quantum computing industry and leading tech players providing exposure to the quantum computing field. The stocks have been ranked using Insider Monkey’s database of 920 hedge funds as of Q3 2022.

 Best Quantum Computing Stocks To Buy

10. Quantum Computing, Inc. (NASDAQ:QUBT)

Number of Hedge Fund Holders: 1

Quantum Computing, Inc. (NASDAQ:QUBT) is a Leesburg, Virginia-based developer of quantum computing-related hardware and software that is focused on establishing real-world applications of the technology.

The main offering of the company is Qatalyst, which is a “quantum application accelerator” that aids companies in solving complex computational products by employing a wide variety of techniques related to computational and quantum computing. The platform is used in industries like finance, healthcare, and supply chain.

Analysts think Quantum Computing, Inc. (NASDAQ:QUBT) is trading at a discount compared to its industry rivals, providing investors an attractive opportunity to go long on the stock. Furthermore, the company’s business model is flexible and is more de-risked compared to its competitors. Quantum Computing, Inc. (NASDAQ:QUBT) also has strategic partnerships with notable organizations like Amazon.com, Inc. (NASDAQ:AMZN) and Splunk Inc. (NASDAQ:SPLK). Experts believe that Quantum Computing, Inc. (NASDAQ:QUBT) is amongst the leading companies in the quantum computing space.

9. Arqit Quantum Inc. (NASDAQ:ARQQ)

Number of Hedge Fund Holders: 3

Arqit Quantum Inc. (NASDAQ:ARQQ) is a London, UK-based company that employs the power of quantum computing to provide unique encryption services through its platform-as-a-serve (PaaS) platform. The platform secures the communication between two networked devices from any threat, even from a quantum computer. The company achieves this by offering QuantumCloud software that can be downloaded on any device.

Experts believe that Arqit Quantum Inc. (NASDAQ:ARQQ) is set to benefit from the secular trends offered by quantum encryption, which is forecasted to have a total addressable market (TAM) of $230 billion by 2025. The cybersecurity industry is expected to undergo a transformation due to the advancements in quantum computing technology, benefitting a company like Arqit Quantum Inc. (NASDAQ:ARQQ). Experts anticipate Arqit Quantum Inc. (NASDAQ:ARQQ) to generate a top line of $660 million with an EBITDA of $477 million by FY25 as it owns a proprietary technology that is in high demand.

LMR Partners was the leading hedge fund investor in Arqit Quantum Inc. (NASDAQ:ARQQ) during Q3 2022.

8. D-Wave Quantum Inc. (NYSE:QBTS)

Number of Hedge Fund Holders: 9

D-Wave Quantum Inc. (NYSE:QBTS) is a Burnaby, Canada-based quantum computing company founded in 1999. The company went public in August 2022 through a merger with a special purpose acquisition corporation (SPAC) and became the third company from the quantum computing industry to go public in the last 12 months.

D-Wave Quantum Inc. (NYSE:QBTS) considers itself the only provider of end-to-end quantum services, starting from the development and delivery of quantum systems to providing application development tools and cloud services based on quantum computing. In a research note issued to investors on November 10, Suji Desilva at Roth Capital assigned D-Wave Quantum Inc. (NYSE:QBTS) a target price of $10 and reiterated a Buy rating on the stock. The analyst highlighted that the company’s Q3 2022 top-line and bottom-line results reflect continued sequential growth.

The growth is being driven by an increasing number of customers that are interested in acquiring a Quantum Computing as a Service (QCaaS) platform to operate quantum-based applications. The expectations of growth are anticipated at a time when the broader macroeconomic circumstances are tough, making D-Wave Quantum Inc. (NYSE:QBTS) one of the best quantum computing stocks to invest in.

7. Quantum Corporation (NASDAQ:QMCO)

Number of Hedge Fund Holders: 11

Quantum Corporation (NASDAQ:QMCO) is a San Jose, California-based company that uses quantum computing to secure videos and other sources of unstructured data.

The company posted its Q2 FY23 results on November 2. Revenue increased by 6.3% YoY to $99.1 million, outperforming the consensus forecast of $94.53 million. The company’s subscription revenue grew for the sixth consecutive quarter, with the number of subscribers rising from 455 to 554 in Q2. Furthermore, Quantum Corporation (NASDAQ:QMCO) bookings increased twofold on a quarterly basis, reaching a record peak backlog of $96 million at the end of the quarter. Quantum Corporation (NASDAQ:QMCO) also provided strong guidance as it anticipates revenue for Q3 FY23 to be in the range of $100 million to $106 million as opposed to the consensus estimate of $103 million. Experts think the company is well-positioned to benefit from the increasing applicability of its services, making it one of the best quantum computing stocks to buy.

Quantum Corporation (NASDAQ:QMCO) was held by 11 hedge funds at the end of Q3 2022.

6. IonQ, Inc. (NYSE:IONQ)

Number of Hedge Fund Holders: 16

IonQ, Inc. (NYSE:IONQ) is a College Park, Maryland-based developer of trapped-ion quantum computers with a strong history of two-and-a-half decades.

In an update issued to investors on November 16, David Williams at Benchmark gave IonQ, Inc. (NYSE:IONQ) stock a Buy rating with a target price of $8. The target price reflects a potential upside of over 65% from the closing price as of December 6. The analyst noted that IonQ, Inc. (NYSE:IONQ) reported another stellar quarter that reflected continued progress as it posted its Q3 2022 results on November 14. Mr. Williams added that IonQ, Inc. (NYSE:IONQ) is on its way to meeting all the important commercial milestones. The company recorded new bookings of $16.4 million, taking the total bookings to $21.2 million at the end of the third quarter. This puts IonQ, Inc. (NYSE:IONQ) on track to meet its annual bookings target of $23 million to $27 million. The company also maintained its FY22 guidance in a challenging and uncertain macroeconomic environment. The analyst thinks that in the field of quantum computing, IonQ, Inc. (NYSE:IONQ) has established a pathway for its growth and sustainability through significant breakthroughs in a short period of time.

As of Q3 2022, IonQ, Inc. (NYSE:IONQ) was held by 16 hedge funds.

In addition to IonQ, Inc. (NYSE:IONQ), companies like NVIDIA Corporation (NASDAQ:NVDA), Intel Corporation (NASDAQ:INTC), and Microsoft Corporation (NASDAQ:MSFT) are also some of the leading companies in the quantum computing industry.

5. Rigetti Computing, Inc. (NASDAQ:RGTI)

Number of Hedge Fund Holders: 16

Rigetti Computing, Inc. (NASDAQ:RGTI) is a Berkeley, California-based company involved in developing superconducting quantum processors and quantum computers. Furthermore, the company has its own Quantum Cloud Services (QCS) platform that connects its machines to hybrid, private and public clouds. The company went public in October 2021 following a merger with SPAC.

In a joint statement on December 6, Strangeworks, Inc. and Rigetti Computing, Inc. confirmed that Strangeworks would make two quantum machine learning (QML) programs from Rigetti usable on its network. These new QML applications are created to accelerate the creation of applications for classification and regression issues and are tuned specifically for use with Rigetti Computing, Inc.’s (NASDAQ:RGTI) quantum computers.

Quinn Bolton at Needham gave Rigetti Computing, Inc. (NASDAQ:RGTI) stock a target price of $3, along with a Buy rating in a research report published on November 15. The analyst highlighted that Rigetti Computing, Inc. (NASDAQ:RGTI) had taken a beating due to economic uncertainty and the transition of the company’s CEO. However, the current stock price reflects the net cash position of the company only without any consideration of the potential of the underlying business model.

For FY22, Rigetti Computing, Inc. (NASDAQ:RGTI) anticipates total revenues to range from $12.0 million to $13.0 million. The expected revenue includes $4.0 million in contracts that are now being discussed with a government agency. Even though the contractual procedure has taken more time than expected, the company is making strides in the discussions and anticipates closing the deal by the end of the current fiscal year.

4. Honeywell International Inc. (NASDAQ:HON)

Number of Hedge Fund Holders: 53

Honeywell International Inc. (NASDAQ:HON) is a Charlotte, North Carolina-based diversified industrials company with exposure in aerospace, automation, productivity, buildings, and chemicals.

The company manufactures and sells Honeywell System Model H1 quantum computing technology commercially. The computer is completely accessed from the cloud platform on a monthly service for eight and 16 hours of daily usage. Honeywell International Inc. (NASDAQ:HON) is the parent company of Quantinuum, the biggest integrated quantum computing entity globally. The company anticipates the size of the quantum computing industry to surpass $1 trillion in the coming years. Honeywell International Inc. (NASDAQ:HON) is working on overcoming processing errors as quantum computers have a high sensitivity to electromagnetic interference. Analysts think Honeywell International Inc.’s (NASDAQ:HON) strong growth prospects make it one of the best quantum computing stocks to buy. The stock also offers an annual forward dividend yield of 1.88% as of December 6.

Adage Capital Management raised its stake in Honeywell International Inc. (NASDAQ:HON) by 103% during Q3 2022.

3. Intel Corporation (NASDAQ:INTC)

Number of Hedge Fund Holders: 69

Intel Corporation (NASDAQ:INTC) is a Santa Clara, California-based company known for producing semiconductor chips globally.

Intel Corporation (NASDAQ:INTC) is aggressively working on gaining supremacy in the quantum computing industry and intends to achieve the capability to mass produce quantum computing chips in the near future. In October 2022, Intel Corporation (NASDAQ:INTC) reached a key milestone in research related to the manufacturing of quantum computing-related chips. Through its research, Intel Corporation (NASDAQ:INTC) established that it could manufacture stable quantum dots in a controlled environment in its existing facilities. The company has made significant advancements in silicon spin qubit fabrication utilizing its transistor fabrication method, making it one of the best quantum computing stocks to invest in. Intel Corporation (NASDAQ:INTC) also offers an annual forward dividend yield of 4.96% as of December 6.

ClearBridge Investments shared its long-term bullish outlook on Intel Corporation (NASDAQ:INTC) in its Q3 2022 investor letter. Here’s what the firm said:

“Also on the detractor side, Intel Corporation (NASDAQ:INTC) delivered a disappointing revenue miss and lowered full-year revenue and earnings guidance as COVID-19-driven demand for PCs abated (where Intel enjoys half its sales) and a delay in its flagship Sapphire Rapids CPU hurt its data center business. Despite these issues, we still believe Intel is an economically sensitive turnaround story with substantial upside.”

2. NVIDIA Corporation (NASDAQ:NVDA)

Number of Hedge Fund Holders: 89

NVIDIA Corporation (NASDAQ:NVDA) is a Santa Clara, California-based company known for manufacturing leading graphic processing units (GPUs) and its related software and services.

NVIDIA Corporation (NASDAQ:NVDA) has developed the first-of-its-kind Quantum Optimized Device Architecture (QODA) that intends to make quantum computing more accessible by providing a hybrid programming environment with classical and quantum capabilities. NVIDIA Corporation (NASDAQ:NVDA) has partnered with Quantinuum to develop applications based on its platform. The company is currently focused on aiding developers in simplifying the coding task on quantum computers by employing its GPUs. Programming in a quantum computing environment is a very challenging task, and NVIDIA Corporation (NASDAQ:NVDA) is playing a bridging role between the roles of classical computers and quantum computers.

Baron Funds shared its outlook on one of the best quantum computing stocks in its Q3 2022 investor letter. Here’s what the firm said:

“NVIDIA Corporation (NASDAQ:NVDA) is a fabless semiconductor company and a leader in gaming and accelerated computing. NVIDIA is powering the growth of AI from the data center to the edge. Shares detracted due to inventory right sizing in NVIDIA’s gaming segment coupled with the broader market sell-off in growth stocks. Given NVIDIA’s end-to-end AI platform and its leading market share in gaming, data centers, and autonomous machines, along with the size of these markets, we believe the company can sustain its growth trajectory. See further discussion of NVIDIA in the top net purchases section below.

During the third quarter, we took advantage of its stock sell-off to add to NVIDIA Corporation, a fabless semiconductor mega cap that is a global leader in gaming cards and accelerated computing hardware and software. The sell-off was driven by a near-term inventory correction in gaming as a result of a COVID-related pull forward in demand as well as the shift in the Ethereum cryptocurrency from proof-of-work to proof-of-stake. Additionally, investors are concerned over the potential slowdown in data center revenues as a result of a weaker macroeconomic environment as well as the recently announced limitations on semiconductor shipments to China. Despite the near-term uncertainty, we believe that NVIDIA’s end-to-end AI platform and its leading market share in gaming, data centers, and autonomous machines, along with the size of these markets, would enable the company to benefit from durable growth for years to come and therefore view the stock price where we added shares as a compelling value for long-term investors. With demand for computing power doubling every one to two years, and Moore’s Law slowing down, there is more need for computing than ever. At the same time, “near free” supply growth (that was possible thanks to Moore’s Law) has slowed dramatically. NVIDIA’s accelerated architecture, with parallel computing at scale, answers that need.”

Of the 920 hedge funds in Insider Monkey’s database as of Q3 2022, NVIDIA Corporation (NASDAQ:NVDA) was held by 89 hedge funds.

1. Microsoft Corporation (NASDAQ:MSFT)

Number of Hedge Fund Holders: 269

Microsoft Corporation (NASDAQ:MSFT) is a Redmond, Washington-based diversified big tech company. The company is at the first position on our list of the 10 best quantum computing stocks to buy.

The company led by Satya Nadella has developed an application known as the Azure Quantum Resource Estimator. The application provides an estimated computing power required to execute a quantum algorithm within a reasonable period. The quantum bit or qubit can be either a zero or a one at the same time and is different from classical computing based on the binary system. Microsoft Corporation (NASDAQ:MSFT) has also achieved the key milestone of developing a topological qubit that ensures more stable and faster processing of data. Microsoft Corporation’s (NASDAQ:MSFT) annual forward dividend yield stands at 1.07% as of December 6.

Here’s what Diamond Hill Capital said about Microsoft Corporation (NASDAQ:MSFT) in its Q3 2022 investor letter:

“Also among our bottom contributors were media and technology giant Alphabet, software and IT services provider Microsoft Corporation (NASDAQ:MSFT) and insurance company American International Group (AIG). Microsoft shares declined in Q3, along with other tech companies, as rising interest rates impacted the near-term outlook. We expect the business to continue to generate strong revenue growth and benefit from operating leverage. Microsoft’s cloud computing services business, Azure, is generating robust growth, confirming its competitive positioning.”

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Disclosure: None. 10 Best Quantum Computing Stocks To Buy is originally published on Insider Monkey.