2 Quantum Computing Stocks That Could Supercharge Your Portfolio

Quantum computing has become one of the most exciting investment themes for 2024. The Defiance Quantum ETF (QTUM) has seen a remarkable increase of 49.4% this year, nearly doubling the S&P 500, which gained 24.3%. Although we may be several years away from having widely available commercial quantum computers, recent significant technological advancements have prompted investors to dive into what many believe could be a new era in computing.

The enthusiasm surrounding quantum computing isn't just based on speculation. In 2024, there were two significant milestones that indicate we might be on the verge of a transformative technology.

Alphabet (GOOG) achieved a historic milestone with its Willow quantum computing system. This system demonstrated the capacity to minimize errors as the number of qubits grows exponentially. This breakthrough has tackled a problem that has troubled experts for almost three decades. Even more astonishing, Willow completed a benchmark computation in less than five minutes, a task that would take today’s fastest supercomputers an incomprehensible 10 septillion years to finish — a duration far exceeding the age of the universe.

Additionally, the startup Infleqtion, collaborating with Nvidia (NVDA), has made strides by showcasing a useful materials science application using logical qubits. This achievement, which provided a six-fold increase in computational accuracy, demonstrates quantum computing's potential impact on diverse fields like battery technology and superconductors.

Despite quantum computing being in its early stages, these initial breakthroughs from industry leaders like Alphabet and Nvidia suggest we are on the cusp of significant advancements. Two companies are leading this innovation that could greatly enhance your portfolio in 2025 and beyond.

Industry Leadership Through Quantum Execution

IonQ (IONQ), a leader in trapped-ion quantum computing, has become one of the standout stocks in 2024. IonQ's innovative method utilizes ionized atoms in its quantum systems, allowing for longer and more complex calculations with reduced error rates compared to other methods. IonQ's platform is compatible with all major cloud services and supports several programming languages, making quantum computing more accessible for developers and researchers.

This company's advantages stem from over 25 years of academic research in ion trap technology and strong partnerships within the government and enterprise sectors. IonQ is also venturing into quantum networking, positioning itself at the crossroads of quantum computing and the potential future quantum internet.

However, despite its impressive stock price increase of 258.5% in 2024, IonQ has yet to turn a profit and faces substantial risks related to technology and commercialization. The quantum computing field is still emerging, with uncertain timelines for achieving practical benefits over classical computers. Additionally, competition from major tech firms and other startups, as well as the threat of technological obsolescence, pose challenges to IonQ's standing in the market.

IonQ’s evaluation might seem high after its strong performance this year, with shares approaching 250 times trailing sales. Nevertheless, its expanding commercial success, growth in quantum networking, and solid balance sheet — boasting around $382.8 million at the end of the last quarter — position it well to capture a large share of what could evolve into a multi-trillion-dollar quantum computing market. For investors willing to take on higher risks over the long term, IonQ represents a direct investment in one of the most promising technological sectors.

Industry Leadership Through Superconducting Innovation

Rigetti Computing (RGTI) is another key player in quantum computing but approaches the technology differently by utilizing superconducting circuits instead of trapped ions. Rigetti's use of an integrated business model features Fab-1, the first dedicated quantum foundry in the industry, which gives the company control over every aspect of the quantum chip development process. This in-house capability enables quicker innovation cycles and safeguards against supply chain issues.

The latest Ankaa quantum processor architecture from Rigetti has achieved 98% fidelity in two-qubit gates, indicating significant progress in quantum performance. Rigetti's focus is on scalable growth through a modular chip design that allows for constructing larger quantum systems from smaller, identical parts. The company has also secured strong partnerships in the government, research, and business sectors.

However, like other quantum firms, Rigetti faces considerable technological challenges and is not yet profitable. With a staggering stock increase of 851.2% in 2024 and a valuation of 130 times its sales, investors are clearly anticipating significant growth ahead. Still, Rigetti’s integrated manufacturing strategy, improving performance metrics, and a clear technology roadmap extending to 2025 provide an intriguing opportunity for investors interested in superconducting quantum technology.

The Quantum Investing Strategy: Pure Plays Versus Tech Giants

While major tech companies like Alphabet and Nvidia have made great strides in quantum computing, their large market values suggest that breakthroughs in quantum technology may not dramatically affect their stock prices. In contrast, specialized quantum companies like IonQ and Rigetti provide more direct exposure to the technology's growth potential, albeit with significantly higher risks. Each is pursuing different technological strategies: IonQ with trapped ions and Rigetti with superconducting circuits, both of which might emerge successfully in what could become an expansive new computing sector.

Given the complexities and early stage of quantum computing, many investors might prefer a diversified investment strategy. The Defiance Quantum ETF provides this option by balancing pure-play quantum stocks with established technology firms propelling advancements in the field. As quantum computing appears to be nearing a pivotal moment, investors have several avenues available to position themselves for what could be one of the most transformative technological advances of this era.

quantum, stocks, technology