Quantum Computing vs. Traditional AI: Which Tech Stocks to Watch in 2025?

Quantum computing has quickly become a hot topic on Wall Street. Recently, Alphabet (GOOG) announced significant progress with its quantum chip, Willow, which has increased interest in quantum stocks. Willow can decrease errors significantly as it scales up and has performed a benchmarking task in just five minutes that would take the most powerful supercomputers around 10 septillion years to complete.

This announcement resulted in a surge in Alphabet's stock, while shares of smaller quantum computing firms like D-Wave Quantum (QBTS), Quantum Computing (QUBT), Rigetti Computing (RGTI), and IonQ (IONQ) also saw an impressive rise.

However, in January, these stocks took a hit due to concerns voiced by prominent tech executives. Nvidia CEO Jensen Huang suggested that truly useful quantum computing is still 15 to 30 years away. Meta Platforms CEO Mark Zuckerberg shared a similar sentiment, indicating that advanced AI might be available before quantum computing becomes practical. Cisco Systems former CEO John Chambers also stated that quantum computing has a long road ahead during this technology-focused decade.

Despite pushback, leaders in the quantum stock sector are defending their technology and its potential.

Quantum Computing vs. AI: Which is the Better Investment?

It is essential for investors to recognize that quantum computing remains a developing technology. Companies such as Quantum Computing, D-Wave Quantum, and Rigetti Computing currently generate little to no revenue. IonQ, being the largest quantum stock, anticipates revenue between $38 million and $42 million for 2024, having recently doubled its revenue in the third quarter. With a market cap of $9 billion, IonQ's price-to-sales ratio exceeds 200, indicating high investor expectations.

The discussion around the viability of quantum computing stocks is ongoing, but when comparing quantum tech to AI, the latter is currently more worthy of investor interest. AI technology is already established, growing at a rapid pace, and disrupting various sectors. Stocks in the AI realm offer more opportunities for growth. Here are two AI stocks that are worth considering for investment today.

1. Micron Technology

Micron Technology (MU) is primarily recognized as a memory chip supplier, but it has recently seen a significant uptick in demand due to AI technologies. In its fiscal first quarter, which concluded in November, the company reported an impressive 84% jump in revenue to $8.7 billion, with data center revenue increasing by over 400% year-over-year, attributed to robust AI demand.

Micron is also closely aligned with Nvidia, believed to be its largest customer, and stocks recently rebounded after Nvidia's announcement that it is utilizing Micron chips for its new platform.

Currently, Micron presents an appealing investment opportunity as its stock fell following a recent earnings report that provided weak guidance. However, management has indicated a return to strong growth, hinting at possible substantial stock gains. At a forward P/E ratio of 14, Micron’s stock appears undervalued given its growth prospects.

2. TSMC

Another AI stock to consider for 2025 is TSMC (TSM), or Taiwan Semiconductor Manufacturing Company. TSMC is the largest contract chip manufacturer worldwide, producing chips for major companies like Nvidia, Apple, and Broadcom, giving TSMC considerable market influence. The company commands over 50% market share in third-party chip manufacturing and roughly 90% in advanced chip technology.

In the fourth quarter, TSMC maintained its lead in the advanced chips sector, earning 74% of its revenue from this area, where chips are manufactured at 7 nanometers or smaller.

TSMC’s revenue saw a remarkable 38% increase, with operating margins approaching 50% for the quarter. Given that demand for AI is expected to continue growing alongside a broader recovery in the chip sector, TSMC is positioned for another robust year in 2025 and beyond.

Randi Zuckerberg has insights into market trends as a former Facebook director and is currently board member of various organizations, while Suzanne Frey, an executive at Alphabet, also serves on several boards. Jeremy Bowman has stock positions in many leading tech companies. There is an ongoing interest in companies like Alphabet, Apple, Cisco Systems, Meta Platforms, Nvidia, and Taiwan Semiconductor Manufacturing, indicating a strong alignment with future technology growth.

Quantum, AI, Investment