What will be the next big thing in investing? Some believe that it could be quantum computing. Global consulting firm McKinsey even projects that "quantum technology could create value worth trillions of dollars within the next decade."
Quantum computers hold the promise of performing calculations in seconds that would take even the fastest supercomputers on the planet today thousands and even millions of years to run. The technology could revolutionize multiple areas, including cryptography, drug discovery, and weather forecasting.
As you might imagine, quantum computing could present a huge opportunity for investors. Want to invest in this hot space? Here are two stocks that are great buys right now.
Image source: Getty Images.
Think big
For investors seeking a megacap stock that's a bona fide quantum computing leader, I think Google parent Alphabet(NASDAQ: GOOG)(NASDAQ: GOOGL) is an excellent pick. Google Quantum AI established six key milestones for its quantum computing roadmap. It has already achieved two of them.
In 2019, Google's Sycamore processor demonstrated the ability to perform computations that can't be done on classical computers. Sycamore successfully performed a calculation that Google said would have taken the most powerful supercomputers available at the time, using the best-known algorithms, roughly 10,000 years to complete. A little over three years later, Google's team built a quantum computer that made a significant improvement in quantum error correction.
Google Quantum AI introduced its latest breakthrough in December 2024 -- the Willow quantum chip. Willow can reduce errors exponentially as more qubits (the basic unit of quantum information) are used. The chip was also able to complete a benchmark computation in less than five minutes. This computation would take the fastest supercomputers 10 septillion (that's 10 with 24 zeros after it) years to complete.
Of course, quantum computing isn't the only reason, or even the most important reason, to invest in Alphabet. The company's Google Search remains an advertising juggernaut, generating billions of dollars in profits each year. Google Cloud is the fastest-growing major cloud services provider and has a huge artificial intelligence (AI) tailwind. Self-driving car technology business Waymo also has tremendous potential with the rising adoption of autonomous ride-hailing services (i.e., robotaxis).
In addition, Alphabet is the most attractively valued member of the "Magnificent Seven" stocks. Its shares trade at only 18 times forward earnings. That's also well below the S&P 500's forward earnings multiple of 22.
Think small
If you're more interested in an up-and-coming company that's a pure-play bet on quantum computing, IonQ(NYSE: IONQ) could be right up your alley. This quantum computing pioneer's market cap is below $12 billion, but I think it could grow much larger.
Only IonQ has quantum hardware available on all three of the largest cloud service providers. The company also has an impressive lineup of partners, including Airbus, General Electric, General Dynamics, Hyundai, Lockheed Martin, and Nvidia.
IonQ has three quantum computers on the market right now. Aria launched in 2021. Forte came out two years later. In 2024, the company introduced Forte Enterprise, which is built for hybrid computing that integrates quantum computing with classical computing. IonQ hopes to launch its Tempo quantum computer later this year.
The company believes its ion trap architecture offers several competitive advantages over rivals. Error correction especially stands out, with IonQ's technology boasting the lowest error correction overhead around.
IonQ's revenue has roughly doubled every year since it listed on the New York Stock Exchange in 2021. The company projects revenue of between $75 million and $95 million in 2025. The midpoint of this range reflects year-over-year growth of 97%.
Some risks to consider
Both of these quantum computing stocks come with some risks that investors should know about. Unsurprisingly, IonQ is the riskier of the two. Despite the company's strong revenue growth, it remains unprofitable. If quantum computing takes longer than anticipated to deliver on its potential, IonQ might not be a big winner for investors. It's also possible that other companies develop better technology.
What about Alphabet? The tech giant faces two key risks. First, the company could have to make changes in response to antitrust lawsuits that make it less attractive to investors. Second, Google Search's business model could potentially be disrupted by generative AI.
The risks for Alphabet and IonQ are real. However, I think both stocks are great picks for investors seeking to profit from quantum computing over the next decade and beyond.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Keith Speights has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool recommends GE Aerospace and Lockheed Martin. The Motley Fool has a disclosure policy.
