Quantum Computing Stocks Surge in 2024: What Investors Need to Know
The Defiance Quantum ETF (NASDAQ: QTUM) has become a leading investment choice in 2024, climbing 49.4% year-to-date, far surpassing the S&P 500‘s impressive 24.3% gain. Although commercial quantum computers are still years away, remarkable technological advances have triggered a surge in investments, indicating a looming revolution in computing technology.
Importantly, this enthusiasm is not mere speculation. Quantum computing marked two significant achievements in 2024, raising hopes that we stand on the brink of a major technological shift.
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Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL) has made headlines with its Willow quantum computing system, which significantly reduced errors as the number of qubits increased. This milestone addresses a problem that researchers have struggled with for nearly three decades. In an astonishing feat, Willow completed a computation that would take the fastest supercomputers 10 septillion years to solve, a time far exceeding the age of the universe.
In another breakthrough, the quantum start-up Infleqtion partnered with Nvidia (NASDAQ: NVDA) to showcase a practical application of materials science using logical qubits. This innovation improved computational accuracy sixfold, demonstrating quantum computing’s potential impact on battery technologies and superconductors.
Although the field of quantum computing is still developing, these pioneering achievements by industry giants like Alphabet and Nvidia suggest that a computing revolution may be near. Investing in these transformative technologies could be beneficial for your portfolio in 2025 and beyond.
Leading the Industry with Advanced Quantum Solutions
IonQ (NYSE: IONQ), a leader in trapped-ion quantum computing, stands out among 2024’s top quantum stocks. By employing ionized atoms as the foundation of its systems, IonQ achieves more extended, sophisticated computations with fewer errors than competitors. The company’s platform is compatible with all major cloud services and supports various programming languages, enhancing accessibility for developers and researchers.
IonQ’s competitive edge comes from over 25 years of research in ion trap technology and solid commercial relationships with both government and private enterprises. The company is also venturing into quantum networking, positioning itself at the crossroads of quantum computing and the future quantum internet.
Despite IonQ’s remarkable 258.5% stock gain this year, it is still unprofitable and faces significant hurdles in technology and commercialization. The industry is nascent, with unpredictable timelines for meaningful advancements over traditional computers. Competing with technology giants and other start-ups, as well as the threat of becoming obsolete, could jeopardize IonQ’s market foothold.
IonQ’s valuation has soared, trading at nearly 250 times its trailing sales. Nevertheless, the company boasts a robust balance sheet of $382.8 million and is well-positioned to capture potential growth in what could evolve into a multitrillion-dollar quantum market. Investors looking for high-risk opportunities in promising technologies may find IonQ an appealing option.
Innovating in Superconducting Quantum Computing
Rigetti Computing (NASDAQ: RGTI) approaches quantum computing differently than IonQ by utilizing superconducting circuits. The company has established Fab-1, the first dedicated quantum foundry in the industry, enabling Rigetti to maintain complete control over its chip development and manufacturing processes. This capability minimizes supply chain risks and supports rapid innovation.
Rigetti’s newest Ankaa quantum processor has achieved an impressive 98% two-qubit gate fidelity, marking substantial progress in quantum computing performance. The company emphasizes scalability through its modular chip design, which allows for the construction of larger quantum systems from smaller components. Rigetti has formed alliances with various sectors, including government and commercial enterprises, bolstering its market position.
Despite its 851.2% stock increase this year, Rigetti faces significant technological challenges and continues to operate at a loss. However, a valuation of 130 times sales reflects optimistic future growth expectations. With its integrated manufacturing, improving performance metrics, and future plans through 2025, Rigetti represents an intriguing option for those interested in superconducting quantum computing.
While major players like Alphabet and Nvidia have made notable advancements in quantum computing, their vast market sizes mean that their quantum breakthroughs may have a minimal effect on their overall stock prices. Conversely, pure-play quantum firms such as IonQ and Rigetti provide more direct exposure to the technology’s potential but come with heightened risks. Each company represents a unique technological direction— trapped ions versus superconducting circuits— both aiming for success in a rapidly expanding market.
Considering the complex nature of quantum computing, some investors may prefer a diversified strategy. The Defiance Quantum ETF combines pure-play quantum stocks with established tech firms, offering a balanced approach. With quantum computing nearing a major inflection point, investors now have various options for positioning themselves in what could be one of the most groundbreaking technological advancements of our era.
Is IonQ Worth Your $1,000 Investment Today?
Before investing in IonQ, keep the following in mind:
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Reflecting back, when Nvidia was recommended on April 15, 2005, if you had invested $1,000 at that time, it would now be worth $825,513!*
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Suzanne Frey, an executive at Alphabet, serves on The Motley Fool’s board of directors. George Budwell has positions in IonQ and Nvidia. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool adheres to a policy of disclosure.
The views expressed here are those of the author and do not necessarily reflect the views of Nasdaq, Inc.
