The First 5 Quantum Computing Stocks I'd Buy If I Were Starting From Scratch
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Quantum computing isn't some far-fetched technology that seems like it belongs in a sci-fi movie. It's real technology that's already being used in some industries with success, and widespread quantum computing isn't that much farther in the future. This makes it vital for investors to position their portfolio for success now, as the hype behind quantum computing could cause a handful of these stocks to skyrocket once the market wakes up to the potential of its widespread usage. If I were starting my portfolio over, I'd scoop up these five quantum computing stocks today. While this investment portfolio is quantum-focused, I think it has what it takes to outperform the market over the long haul as well. Image source: Getty Images. Pure plays: IonQ and D-Wave Quantum Both IonQ (IONQ +1.43%) and D-Wave Quantum (QBTS +1.65%) are popular quantum computing investments. They are pure plays, so they have only one goal: to create a viable quantum computer that is widely used. If they fail at this task, their stocks will head to $0. Fortunately for their shareholders, these two are already seeing success and are on a solid pathway to becoming much larger companies. ExpandNYSE: IONQIonQToday's Change(1.43%) $0.61Current Price$43.30Key Data PointsMarket Cap$16BDay's Range$41.12 - $43.3352wk Range$25.89 - $84.64Volume787KAvg Vol26MGross Margin-2267.11% IonQ owns the world record for the most accurate quantum computer. This is a huge deal because quantum computers' high error rates are one of the primary issues that must be fully addressed before they will be suitable for widespread usage. The other is scale: Quantum computers need to operate with a lot of qubits to handle the types of complicated computations that are expected to provide the bulk of their use cases. IonQ recently announced a new plan detailing how it can scale its technology up to a 10,000-qubit quantum computer. This would be a major breakthrough and establish it as a top competitor in the space. D-Wave Quantum is taking a different approach from most other companies pursuing this type of technology. Instead of attempting to develop a general-purpose quantum computer like IonQ, it's building quantum annealing machines. These tools are useful for a narrow range of tasks, but they excel at optimization problems -- and that category happens to include a number of the most obvious potential commercial uses for quantum computing. D-Wave Quantum has already sold a few of these machines, and several companies are using them for tasks like managing complex scheduling and supply chains. That places D-Wave Quantum on a path toward becoming a viable company. Its tailored solutions may be the best way to invest in this space. Legacy tech players: Alphabet and Microsoft While IonQ and D-Wave could provide investors with major upside if they succeed, if they fail, investors lose it all. So, it would be smart to balance out those aggressively speculative stock picks with more conservative ones, such as Alphabet (GOOG +2.37%) (GOOGL +2.40%) and Microsoft (MSFT +0.37%). Both of those tech giants are competing in the quantum computing realm, and both have announced breakthroughs in the technology. ExpandNASDAQ: GOOGLAlphabetToday's Change(2.40%) $8.26Current Price$352.66Key Data PointsMarket Cap$4.2TDay's Range$342.70 - $353.1852wk Range$147.84 - $353.18Volume1MAvg Vol32MGross Margin59.68%Dividend Yield0.24% Alphabet has published many groundbreaking papers regarding the potential of quantum computing, including one that predicts it will be able to break cryptocurrency security as soon as 2029. Microsoft hasn't been as vocal about its quantum breakthroughs, but it is developing its own quantum processors, and it's expected to be a major player in this realm. I think both of these stocks are great picks in general, and if either of their quantum computing solutions works out, it could contribute meaningfully to their upside. Bridging the gap: Nvidia Nvidia (NVDA +3.25%) believes that when quantum computers go mainstream, it will largely be in hybrid computing environments where they work in tandem with classical supercomputers powered by accelerated computing units (like its GPUs). If that's the case, Nvidia has perfectly positioned itself to take advantage. ExpandNASDAQ: NVDANvidiaToday's Change(3.25%) $6.78Current Price$215.05Key Data PointsMarket Cap$5.1TDay's Range$207.40 - $216.3752wk Range$104.08 - $216.37Volume5.4MAvg Vol174MGross Margin71.07%Dividend Yield0.02% It's doing several tasks, such as releasing a purpose-built artificial intelligence (AI) model for quantum computers, adapting its leading CUDA software for the quantum computing realm, and creating NVQLink, which allows quantum computers to plug into classical accelerated computing infrastructure. All this lends itself to a hybrid approach, which would allow Nvidia to maintain its dominance in the computing world while also bridging the gap to the next great technology. I think this is a great way to appreciate the space and also gives you the upside of current AI spending while waiting for quantum computing to become more mainstream.