Want to Buy Quantum Computing Stocks This Year? Two Companies That Could Be Worth Your Investment

Last year saw a significant rise in the value of quantum computing stocks as investors rushed to get ahead in what many believe will be a groundbreaking technological shift. This excitement peaked in December 2022 when Alphabet, the parent company of Google, showcased the remarkable capabilities of its new quantum chip, Willow.

However, in January, Nvidia CEO Jensen Huang dampened this enthusiasm during a discussion at the CES conference in Las Vegas. He stated that it might take at least 15 years before quantum computers become truly beneficial.

Despite this, it is not too early to explore investment opportunities in this fledgling sector. In fact, Huang will be leading Nvidia's inaugural Quantum Day on March 20, 2025, at the GPU Technology Conference (GTC), aimed at guiding leaders and experts in the field of quantum computing.

Understanding Qubits

Qubits, or quantum bits, are fundamental to quantum computing. They enable the processing of multiple problems simultaneously, leveraging principles of quantum mechanics to create data combinations beyond the capabilities of traditional bits. This unique trait makes quantum computers particularly powerful for solving complex mathematical challenges.

Applications for quantum computing are vast, encompassing fields like drug discovery, aerospace, encryption, material science, and genomics. Different methods exist for creating qubits, and IonQ, for instance, utilizes atomic ions to harness its computational power. Currently, IonQ offers quantum computers with as many as 36 qubits, with plans for a new commercial model featuring 64 qubits by the end of 2025.

A Long-Term Perspective on Quantum Computing

Headquartered in College Park, Maryland, IonQ has teamed up with the University of Maryland to create advanced quantum systems and networks, working towards a highly secure Quantum Internet. Recently, IonQ also secured a $21 million contract with the United States Air Force Research Lab (AFRL) to establish quantum networking infrastructure to connect ground stations to drones.

The company anticipates generating around $40 million in revenue for the full year of 2024, but its market capitalization was recently estimated at about $8.5 billion. To put this into context, the Boston Consulting Group (BCG) predicts it might not be until 2040 that a sustainable market for quantum hardware and software could reach between $90 billion and $170 billion.

The Importance of Security in Quantum Computing

Meanwhile, Arqit Quantum, based in London, is pursuing a different dimension within the quantum space. It offers an encryption software platform that fortifies the data and communication channels of cloud-connected devices, making them resilient against the increasing capabilities of quantum computing.

Arqit secures communication by generating secret keys that encrypt messages, ensuring that only authorized devices can access the information. These keys are single-use, enhancing security. Their approach is based on a “zero-trust” model, requiring devices to validate themselves before being trusted. However, Arqit has faced a decline in revenue in recent years while shifting to operational subscription models, which has resulted in lower immediate income.

Investor Sentiment and Market Dynamics

In its 2024 fiscal year ending September 30, 2024, Arqit reported only $293,000 in revenue but appointed a new CEO in September as it embarks on a new chapter in terms of growth. The company's stock price doubled over the last year as enthusiasm surged around quantum technologies, especially following the announcement of new business prospects.

One such opportunity includes a multi-year enterprise license agreement with a Middle Eastern government, which Arqit expects will generate over $1 million in annual recurring revenue. While 2025 promises growth for Arqit, much of that potential seems already factored into its $330 million market cap.

As investors race to capitalize on the next major tech wave, there is growing chatter from large corporations about quantum computing. Recently, Microsoft noted that 2025 is a pivotal year to become “quantum-ready” as research accelerates.

However, even with advanced chips like Google’s Willow, which boasts 105 qubits, achieving practical applications may require systems with more than a million qubits, potentially up to 20 million. The timeline for quantum computers to harness the necessary power for significant scientific or business challenges remains uncertain. Investments in this arena might not yield immediate results and could even take years to prove valuable. It may be wiser for investors to build their positions gradually. Nonetheless, IonQ and Arqit are two companies to keep an eye on as the field of quantum computing evolves.

Note: Investments entail risk, and it is important to conduct thorough research before investing.

quantum, computing, stocks