These pure-play companies are not generating enough revenue for investors to get excited about them, and virtually all of them are in their start-up phase. Investors who are already looking for the next market sensation and are considering a few names in the nascent quantum computing space should look into these well-established companies. Wall Street is already happy with them.
Nvidia (NVDA)
Nvidia (NASDAQ:NVDA) continues to control about 81% of the market for AI chips used in personal computers and data centers, and this fact has driven its stock price to higher and higher in 2023 and the first quarter of 2024. The market is stay crazy about AI, and for good reason, but Nvidia’s future likely encompasses quantum computing as well.
The acclaimed chipmaker’s advanced Tensor Core GPUs power some of the most advanced quantum simulators and algorithms, making Nvidia an important player in the quantum computing space. Moreover, Nvidia has developed its own quantum software development kit and platform called cuQuantum, which leverages its CUDA programming model and libraries to enable developers to create and run quantum applications on Nvidia GPUs.
While U.S. equities rallied toward the end of Q1, there appears to be a significant pullback in the market while analysts reassess how stretched trading multiples have become. Nvidia’s share price has fallen 4% since the start of the second quarter, opening up a buying opportunity for investors interested in the chipmaker.
Nvidia has been a Wall Street favorite for some time now, and I think there is little doubt that when quantum computing does take off, Nvidia could very well rise above the rest.
Alphabet (GOOG, GOOGL)
Flush with cash, Alphabet (NASDAQ:GOOG, GOOGL) has made a variety of investments in various computing technologies over the past two decades. The company also has been developing quantum computers since 2006 and achieved a milestone in 2019 when it demonstrated “quantum supremacy,” or the ability of a quantum computer to perform a task that is impossible for a classical computer.
Google’s quantum computer, called Sycamore, used 54 qubits to perform a calculation in 200 seconds that would take a supercomputer much longer to complete. Although some researchers have claimed to be able to do what Google’s Sycamore had done by using a normal supercomputer, Google is continuously working on improving its quantum hardware, software and algorithms. And the results are promising. The new version of Sycamore apparently can make calculations that would take supercomputers 47 years to complete.
In order to bring about more use-cases for quantum computing, Google has launched a 3-year competition with a $5 million prize for researchers who can come up with new quantum algorithms that can solve existing problems humanity faces. This kind of investment could definitely help steer the new sector in the right direction.
In its Q4’2023 earnings report, cloud continued to be the company’s growth engine, growing 26% on a year over year basis. In the long term, quantum computing could be an even bigger growth engine for Google. Wall Street is excited about GOOG shares as well, with the majority of analysts covering GOOG giving the stock a “Buy” or “Strong Buy” rating. If you are looking for the best quantum computing stocks to buy, start here.
Honeywell (HON)
Honeywell (NASDAQ:HON) is a diversified industrials conglomerate with a wide customer set that includes end-markets such as aerospace, building technologies, performance materials, and safety and productivity solutions.
The industrials conglomerate has been growing its revenue and earnings consistently, driven by a mix of strong organic growth, strategic acquisitions, and operational efficiency. In 2023, Honeywell released a solid Q4 earnings report, which saw the company increased adjusted earnings per share to $2.60, above guidance. Organic growth for the quarter was also up 2%. The conglomerate also gave shareholders rosy guidance for 2024; the company expects to increase annual EPS and margins.
In addition to industrials products and solutions, Honeywell has also worked on developing quantum computing technologies. These could pivot the company into novel, lucrative business territories. Honeywell has also invested in quantum computing startups, including Quantinuum, which was valued at $5 billion in January after its fundraising round.
Honeywell shareholders have reason to be hopeful as both secular trends and innovative triumphs could lead shares to new heights.
On the date of publication, Tyrik Torres did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Tyrik Torres has been studying and participating in financial markets since he was in college, and he has particular passion for helping people understand complex systems. His areas of expertise are semiconductor and enterprise software equities. He has work experience in both investing (public and private markets) and investment banking.