Quantum Computing Stocks Surge Amid Alphabet’s Breakthrough
Investors are buzzing about quantum computing following Alphabet’s significant achievement with its new chip, Willow.
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) announced that Willow, its latest quantum chip, dramatically reduces computation errors as it scales. The chip can perform a benchmark computation in just five minutes. This task would take current supercomputers an astonishing 10 septillion years to complete.
Where should you invest $1,000 today? Our analysts reveal the 10 best stocks to consider now. See the 10 stocks »
The news led to a rise in Alphabet’s stock and caused shares of smaller quantum computing companies to skyrocket. Stocks like D-Wave Quantum (NYSE: QBTS), Quantum Computing (NASDAQ: QUBT), Rigetti Computing (NASDAQ: RGTI), and IonQ (NYSE: IONQ) have seen increased interest.
Yet, earlier this year, these stocks faced declines due to skepticism from leading tech executives. Nvidia CEO Jensen Huang stated that practical quantum computing is still 15 to 30 years away. Meta Platforms CEO Mark Zuckerberg also expressed doubts about its immediate usefulness, suggesting that advanced AI would likely precede practical quantum applications. Comments from former Cisco Systems CEO John Chambers supported these views, claiming quantum computing is a distant technology.
Despite this skepticism, leaders in quantum computing are defending their technologies and business models.
Image source: Getty Images.
AI or Quantum Computing: Which is the Smarter Investment?
Investors should recognize that quantum computing remains an emerging field. Companies like Quantum Computing, D-Wave Quantum, and Rigetti Computing currently show minimal revenue. Among these, IonQ is the largest player but anticipates only $38 million to $42 million in revenue for 2024, despite a revenue increase of 100% in the third quarter. With a market cap of $9 billion, IonQ’s stock trades at a price-to-sales ratio exceeding 200, indicating that investors are highly optimistic about this stock.
The debate over the potential and timeline of quantum computing’s impact continues. Presently, artificial intelligence (AI) appears to be the more promising investment option due to its rapid development and existing applications across various sectors.
1. Micron Technology
Micron Technology (NASDAQ: MU) is primarily recognized as a memory chip supplier but is experiencing increasing demand driven by AI advancements.
The company reported an 84% rise in revenue for its fiscal first quarter, which ended in November, bringing in $8.7 billion. Notably, Micron’s data center revenue skyrocketed over 400% year-over-year and grew 40% from the previous quarter, reflecting strong AI demand.
Micron’s stock recently rebounded after Nvidia announced it was using its chips in a new platform, Blackwell. Although Micron’s stock suffered after a disappointing earnings report, management remains optimistic about returning to strong growth, suggesting potential gains. With a forward P/E ratio of 14, the stock appears relatively low-priced given its growth prospects.
2. TSMC
Another stock to watch in 2025 isTSMC (NYSE: TSM), or Taiwan Semiconductor Manufacturing Company.
As the largest contract chip manufacturer globally, TSMC produces chips for major companies like Nvidia, Apple, and Broadcom. With over 50% market share in third-party chip fabrication, and a remarkable 90% in advanced chip production, TSMC plays a vital role in the global economy.
In the fourth quarter, TSMC reported that advanced chips accounted for 74% of its revenue, classifying those at 7 nanometers or less. The company experienced 38% revenue growth, with operating margins nearing 50% for the same period.
With ongoing demand in AI and a projected recovery in the broader chip sector, TSMC is poised for another strong performance in 2025 and beyond.
A Second Chance at Lucrative Investments
Curious if you missed out on investing in top-performing stocks? Here’s a chance to consider.
On rare occasions, our team recommends “Double Down” stocks—companies they believe are on the verge of significant growth. If you fear you’ve already missed your window of opportunity, now may be the ideal time to invest.
- Nvidia: If you invested $1,000 when we issued a “Double Down” in 2009, you’d have $357,084!*
- Apple: A $1,000 investment when we recommended this stock in 2008 would be worth $43,554!*
- Netflix: $1,000 invested when we issued a “Double Down” in 2004 has grown to $462,766!*
Our current recommendations include three exceptional companies, and opportunities like this are rare.
See 3 “Double Down” stocks »
*Stock Advisor returns as of January 13, 2025
Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to Meta Platforms CEO Mark Zuckerberg, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Broadcom, Meta Platforms, Micron Technology, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Alphabet, Apple, Cisco Systems, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends Broadcom. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
