Quantum Computing: Investing in the Next Big Tech Revolution
Investors may find the next game-changing technology in quantum computing, which holds promise for solving complex problems. Although scientists have been researching in this domain for years, recent breakthroughs indicate that real-world applications may soon be within reach.
To understand quantum computing, it’s essential to distinguish it from classical computing. Classical computers rely on bits as either zeros or ones to store information. Quantum computers, however, utilize qubits, which can represent a zero, a one, or both simultaneously. This capability allows quantum systems to tackle specific problems significantly faster than their classical counterparts, addressing questions in mere minutes that today’s computers would require thousands of years to resolve.
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As quantum technology matures, companies involved in producing and utilizing these tools could see substantial revenue gains. If you are interested in investing in this promising field and are prepared for a long-term commitment, consider the following two stocks currently poised for growth.
Image source: Getty Images.
1. Alphabet
Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) generates billions in annual revenue, primarily due to its dominance in the search market and a rapidly expanding cloud computing sector. Many are familiar with the Google Search platform, which attracts significant advertising dollars as companies reach their target markets.
In the latest quarter, Google services revenue grew by 10%, exceeding $84 billion. Meanwhile, Google Cloud, offering a broad range of products and services, saw revenue rise 30% to $12 billion.
Investing in Alphabet provides exposure to an established tech company committed to ongoing revenue growth. Furthermore, Alphabet is actively investing in quantum computing, having recently reported significant advancements in this field.
Alphabet’s Willow quantum chip recently became the first to effectively address significant industry challenges by minimizing errors. Demonstrating remarkable performance, it completed a calculation in just five minutes that would have taken traditional supercomputers 10 septillion years—an incomprehensibly long time. The company’s optimistic outlook for Willow suggests it may lead to solving real-world challenges.
Currently, Alphabet’s stock is trading at approximately 18 times forward earnings estimates, which is a decrease from nearly 25 just a few months ago, making it a strong value proposition given its robust business model and potential in quantum technology.
2. Microsoft
Microsoft (NASDAQ: MSFT) is another major player familiar to many investors. With a market capitalization exceeding $2.9 trillion, this software giant ranks as the second-largest company globally, just behind Apple. Microsoft boasts a solid history of earnings growth, and its returns on invested capital reflect prudent management over the years.
MSFT Net Income (Annual) data by YCharts
The company’s primary revenue sources include software products from its Productivity and Business Processes division and cloud services from the Intelligent Cloud segment. In the last quarter, these segments generated $29 billion and $25 billion in revenue, respectively, with overall revenue and net income rising in double digits year over year.
Similar to Alphabet, Microsoft presents a reliable investment opportunity, as it has established itself as a powerhouse in its industry. By purchasing Microsoft shares, investors also position themselves to capitalize on the growth of quantum computing.
Recently, Microsoft unveiled its Majorana 1 quantum chip, which the company claims could expedite the development of functional quantum computers to a matter of years rather than decades. Additionally, Microsoft has launched a “quantum ready” program to aid businesses in navigating investments in this emerging space, projecting that 2025 will be crucial for preparation.
Currently, Microsoft shares trade at about 29 times forward earnings estimates, down from over 36 last year. This presents a favorable entry point for investors seeking a secure yet exciting way to invest in quantum computing’s future.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the mentioned stocks. The Motley Fool has positions in and recommends Alphabet, Apple, and Microsoft. The Motley Fool suggests long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are strictly those of the author and do not necessarily reflect those of Nasdaq, Inc.
