In this article, we discuss the 10 best quantum computing stocks to buy according to hedge funds.
Quantum computing stocks are once again in focus after yesterday’s major breakthrough announcement by one of the biggest players in this field.
Investors have had high expectations from quantum computing firms for many years, but the technology has consistently failed to deliver on the promise. However, a deeper understanding of the tech behind quantum computing is required to fully understand the complexity of the issue. Quantum computers were theorized in the 1980s, but their development has been fraught with challenges due to the fragility of qubits. Unlike traditional computers that use binary bits, like ones and zeroes, quantum computers utilize quantum bits, or qubits, which can exist in multiple states simultaneously due to superposition. Qubit fragility typically leads to higher error rates for quantum computers. Companies have tried to address qubit fragility through innovations — ranging from light particles to trapped ions, but few have been successful. However, latest breakthroughs in this field herald the arrival of quantum supremacy – a term used to explain the processing power of quantum computers compared to traditional ones.
Read more about these developments by accessing 10 Best Quantum Computing Stocks to Buy According to Analysts and 10 Buzzing AI Stocks According to Goldman Sachs.
Since the latest breakthroughs showcase that quantum computers can accomplish tasks in minutes that would otherwise take ten septillion years – exceeding the age of the universe – it would be reasonable to assume that quantum computers can now move on from accomplishing mundane tasks like generating random numbers or solving specific mathematical problems, towards practical applications in drug discovery, artificial intelligence, and cryptography. This has huge implications for investors who are increasingly frustrated by the plateauing advancement in the field of AI and are actively exploring for emerging opportunities in the tech field that offer explosive growth potential along the same lines. Sylvia Jablonski, the CEO of Defiance ETFs, appeared on news platform CNBC earlier this year to highlight this.
“The way I see markets today is the absolute fervor and interest in all things A.I. and A.I. is the tide that rises all boats. I think quantum is the next generation of A.I. You need it to process data and make changes in all of the sectors we have been talking about that A.I. has been impacting with drug discovery and curing diseases. Just as AI is powering progress in not just the computer industry, but in fields that adopt the use of AI, quantum computing will be used in processing data for sectors already being transformed by AI, such as drug discovery and curing diseases.”
Read more about these developments by accessing 12 Best Quantum Computing Stocks To Invest In and Beyond the Tech Giants: 35 Non-Tech AI Opportunities.
For this article, we selected quantum computing stocks by sifting through the holdings of popular quantum computing ETFs. The stocks listed below are also popular among hedge funds. Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A quantum computer on a countertop in an engineering laboratory with a technician at work.
Best Quantum Computing Stocks To Buy According to Hedge Funds
10. Quantum Computing Inc. (NASDAQ:QUBT)
Number of Hedge Fund Holders: 2
Quantum Computing Inc. (NASDAQ:QUBT) is an integrated photonics company that offers accessible and affordable quantum machines. Even though the firm is small, with a market capitalization of around $880 million, it is one of the best quantum computing stocks according to hedge funds. One of the reasons for this is the significant momentum behind the stock, with shares rallying close to 750% so far this year, as investors bet big on the company to deliver on the promises of quantum technologies and products under development.
In late November, the firm announced that it had secured two orders for the thin film lithium niobate (TFLN) photonic chip foundry. TFLN is a cutting edge material used in high-powered computers. This material operates with an extremely high bandwidth and with lower insertion losses, and is likely to be a key enabler of the 1.6 and 3.2 terabit optical switches and interconnects used by hyperscalers in their AI data centers.
TFLN is presently only sourced in small quantities from China. However, Quantum Computing plans to open a fully commissioned TFLN fabrication facility in Arizona by the end of the first quarter of 2025. The firm stated in a policy paper published earlier this year that once the facility is functional, it would become the only company in the United States capable of processing 150 mm wafers. TFLN chips can be used for a variety of purposes, including quantum computing, quantum sensing, high-frequency modulators, and LiDAR.
9. Arqit Quantum Inc. (NASDAQ:ARQQ)
Number of Hedge Fund Holders: 2
Arqit Quantum Inc. (NASDAQ:ARQQ) provides cybersecurity services through satellite and terrestrial platforms in the United Kingdom. In contrast to the other best quantum computing stocks according to hedge funds, the firm is not involved in the manufacture of quantum computers, but is instead focused on production of quantum-secure encryption to safeguard data against current and future cybersecurity threats, including those posed by quantum computers. One of the premier products of the firm is QuantumCloud, a Platform as a Service that creates unbreakable software encryption keys.
Earlier this month, the firm posted earnings for the 2024 fiscal year, reporting a revenue of $293,000. During the earnings call, the senior management of the firm stated that during the period, Arqit executed or was engaged in demonstration and testing initiatives with 13 organizations or enterprises. Per the management, this demonstrated that the firm was moving into a revenue growth and customer fulfillment phase of development. The management added that through a distribution partner, Arqit had executed a seven figure, multi-year annual recurring revenue contract for a significant governmental end customer.
As the firm focuses on the biggest and most actionable opportunities which reside in telecom, government and defense, Wall Street analysts are closely monitoring the progress of this quantum computing play. HC Wainwright recently raised the price target on the stock to $27 from $22 and kept a Buy rating on the shares. As the business moves into fiscal 2025, the advisory expects the company to deliver more meaningful revenue as demonstration activity moves to operating licenses.
8. D-Wave Quantum Inc. (NYSE:QBTS)
Number of Hedge Fund Holders: 6
D-Wave Quantum Inc. (NYSE:QBTS) develops and delivers quantum computing systems, software, and services worldwide. The firm has the honor of being the first commercial supplier of quantum computers in the world, per CEO Alan Baratz. In a recent interview with news platform Fox Business, Baratz highlighted that D-Wave Quantum was focusing on the development of quantum annealers as they emerged as a critical accelerant to commercial adoption of quantum computing. Quantum annealers use a specialized approach to quantum computing and focus on solving optimization problems.
A prominent D-Wave product in this regard is the D-Wave Advantage. It features thousands of qubits and is used in industries like logistics, healthcare, and finance. A qubit is the basic unit of information in quantum computing, just like binary units are in traditional computing. The hype around quantum computing and the success of D-Wave Advantage has helped push the market capitalization of the company over $1 billion this year. In the recent earnings call, the firm revealed that it expected revenue and bookings to improve in the closing months of 2024 after missing analyst expectations in the third quarter.
D-Wave Quantum is one of the best quantum computing stocks according to hedge funds and Wall Street analysts. B Riley analyst Craig Ellis recently raised the price target on the stock to $4.50 from $3.75 and kept a Buy rating on the shares. In an investor note, Ellis stated that the advisory saw numerous positive higher-level intermediate to long-term sector thesis takeaways in support of quantum computing companies. The analyst added that there was evidence of frontier technology investor interest in search of what’s next potential, beyond in-progress AI enthusiasm. Per B Riley, this would potentially further benefit D-Wave Quantum’s end demand, financials, and stock sentiment in quarters and years ahead.
7. Rigetti Computing, Inc. (NASDAQ:RGTI)
Number of Hedge Fund Holders: 7
Rigetti Computing, Inc. (NASDAQ:RGTI) builds quantum computers and the superconducting quantum processors. It is one of the best quantum computing stocks according to hedge funds as it has the potential to be the infrastructure leader of the emerging field, like NVIDIA is to the artificial intelligence market. In addition to the building of quantum computers and quantum processors, the firm is also marketing Quantum Cloud Services, a cloud platform that offers businesses the opportunity to access the power of quantum processors through the cloud, in full integration with traditional computer hardware.
These products place the company at the forefront of quantum computing innovations. Alliance Global Partners analyst Brian Kinstlinger recently raised the price target on the stock to $5.50 from $3.50 and kept a Buy rating on the shares after the company announced last week that it had completed a $100 million At-The-Market offering. Alliance raised the price target with the financing risk eliminated for five years, stating that it remains bullish as it believes Rigetti is in a leadership position in the development of a gate-based QPU that demonstrates quantum advantage.
The shares have significant catalysts ahead that could push the share price higher, even after a 300% rally over the past month. Some of these catalysts include the launch of the 100-qubit system, the development of modular architecture validation in mid-2025, and the manufacture of 336-qubit Lyra processors. Partnerships with prominent firms like NVIDIA, Amazon, and Fermilab are also likely to keep the firm in the financial headlines in the coming months.
6. IonQ, Inc. (NYSE:IONQ)
Number of Hedge Fund Holders: 17
IonQ, Inc. (NYSE:IONQ) engages in the development of general-purpose quantum computing systems in the United States. The surging investor interest in quantum computing has helped push the shares up by close to 200% year-to-date. It is one of the best quantum computing stocks to buy according to hedge funds as it offers pure exposure to the quantum industry and has demonstrated stronger commercial traction. For example, in the third quarter, the company posted a revenue of $12.4 million, up more than 102% year-on-year.
This performance was driven by over $63 million in new bookings by the quantum computing firm, including a $54 million contract with the US Air Force Research Lab to develop networked quantum systems. The quantum computers marketed by the firm make use of trapped ion quantum computing technology. This offers high stability and connectivity between qubits. Unlike traditional computers, which use binary units to process data, qubits process the zeroes and ones of binary units simultaneously. This speeds up processing times. To put this into context, the latest Forte Enterprise system marketed by IonQ can process 34 billion scenarios simultaneously.
IonQ has also been expanding partnerships with major companies to gain mainstream recognition. For example, the firm recently announced that it would partner with pharma giant AstraZeneca to develop quantum applications for drug discovery and development. Earlier, it had also announced a deal with software firm Ansys to bring quantum applications to computer-aided engineering. Most recently, the quantum computing company revealed that it would be purchasing Qubitekk, a firm that designs, builds and integrates the hardware and software for quantum networks.
5. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 55
Honeywell International Inc. (NASDAQ:HON) operates as a diversified technology and manufacturing company worldwide. Over the past few years, the company has emerged as a leader in the development of precision control systems, stemming from legacy expertise in the manufacture of aerospace and industrial products. This gives the firm a competitive edge in developing advanced quantum hardware. The firm serves the quantum computing market through Quantinuum, a firm formed in 2021 through the merger of Honeywell Quantum Solutions and Cambridge Quantum.
The firm features on the list of best quantum computing stocks according to hedge funds as it combines hardware and software expertise to offer end-to-end quantum solutions. Some of the key areas where the company serves quantum customers include quantum chemistry, optimization, cybersecurity, and machine learning. Since it was founded, Quantinuum has raised over $620 million in funding, including $300 million from a group of high profile investors earlier this year. Latest reports suggest that Honeywell, which retains a 54% ownership stake in the quantum firm, plans to take it public at a valuation of over $10 billion.
However, not all hedge funds are impressed by the quantum venture of Honeywell. For example, earlier this year, Elliott Management, led by billionaire Paul Singer, penned an open letter to the board of directors of Honeywell, urging for the breakup of the business to separate the aerospace and automation activities. The letter stated that in Honeywell’s case, its underlying business units not only competed with one another for investment allocation, but also had to compete against broader corporate initiatives. The letter named Quantinuum as an example, noting that while the fund made no judgment on Quantinuum itself, it was reasonable to question whether Honeywell’s investing in quantum computing was a distraction – in either investment dollars or management mindshare – from its core businesses.
4. Alphabet Inc. (NASDAQ:GOOG)
Number of Hedge Fund Holders: 160
Alphabet Inc. (NASDAQ:GOOG) is a California-based technology company that owns and runs the internet search engine Google. The firm is involved in the quantum universe through the Google Quantum AI Lab. This lab focuses on quantum computing applications that help with machine learning and solving difficult computer science problems. In 2019, the lab jumped into the spotlight after Google announced in a paper that it had achieved quantum supremacy. Per the tech giant, the Google quantum chip had solved a problem that would take a classical computer 10,000 years to solve. This claim was later disputed by infotech firm IBM.
Google Quantum AI Lab is once again in the news as the firm recently announced that it had taken the IBM reservations regarding the 2019 announcement into account to develop a new quantum chip that had solved a computing problem in five minutes that would take a classical computer more time than the history of the universe. The new chip, named Willow, has 105 qubits, the building blocks of quantum computers. These blocks are important as they are fast but error-prone. Traditionally, adding qubits to the chip would increase the chances of errors, but Google has said it has found a way to string together the qubits so that error rates go down as the number of qubits goes up.
The latest development is one of the reasons why the firm is among the best quantum computing stocks to buy according to hedge funds. Anthony Megrant, the chief architect for Google Quantum AI, put the Google quantum breakthrough into perspective during a recent interview, saying that some of Google’s rivals were producing chips with a larger number of qubits than Google, but Google was focused on making the most reliable qubits it could. He also revealed that the firm built its own dedicated fabrication facility to produce its Willow chips.
3. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 193
NVIDIA Corporation (NASDAQ:NVDA) provides graphics, computing and networking solutions. Even though the company is not directly involved in the manufacture of quantum computing hardware, it still makes it to the list of best quantum computing stocks to buy according to hedge funds because it focuses on creating software, tools, and hardware integration for hybrid quantum-classical computing systems. For example, it markets NVIDIA cuQuantum, a software development kit designed for simulating quantum circuits on classical GPUs. This platform allows researchers to build and test quantum algorithms without needing access to quantum hardware.
The famous Selene Supercomputer, the internal GPU-powered supercomputer developed by NVIDIA, is used for quantum simulation research as well. The GPUs provided by the company are used to run quantum algorithms in various industries. For example, in drug discovery, they are used to accelerate quantum simulations for molecular modeling and interactions. In cryptography, they are used in developing and testing quantum-safe encryption techniques.
NVIDIA markets NVIDIA Quantum Cloud as well. The cloud provides access to one of the most powerful quantum computing platforms in the world through Quantum Cloud APIs capable of running high tech projects on a range of NVIDIA GPU systems. These quantum products are integrated into the AI offerings of the company, helping it post record-breaking revenue numbers. In the third quarter of fiscal 2025, NVIDIA reported a record revenue of $35.1 billion, a 17% increase from the previous quarter and a 94% rise from the same period the previous year.
2. Microsoft Corporation (NASDAQ:MSFT)
Number of Hedge Fund Holders: 279
Microsoft Corporation (NASDAQ:MSFT) is a Washington-based technology company. It is one of the best quantum computing stocks according to hedge funds as it offers a range of quantum computing solutions at a scale smaller companies simply cannot match. A major highlight of the quantum business includes the Azure Quantum Platform, a cloud-based quantum computing service, providing access to quantum hardware and software tools. The tech giant has also recently partnered with leading quantum hardware companies like IonQ and Rigetti to integrate diverse quantum technologies into Azure Quantum.
The company is still yet to release a fully operational quantum computer. However, it has focused on building hybrid solutions and cloud accessibility, ensuring that the quantum computing division of the firm remains a pivotal part of the global quantum ecosystem. Some important numbers highlight the Microsoft commitment to quantum computing. Every year, the tech giant spends close to $1 billion in research and development in emerging tech, including quantum computing and AI. This strategy has proved fruitful, with the company holding over 3,000 patents in these domains.
Microsoft has also heavily invested in the quantum programming ecosystem. This is demonstrated by the fact that more than 10,000 developers have engaged with the Quantum Development Kit of the tech giant. The firm is working on quantum solutions for optimization problems, materials science, cryptography, and artificial intelligence. Azure Quantum also supports hybrid quantum-classical workloads to bridge current quantum capabilities with classical computational power.
1. Amazon.com, Inc. (NASDAQ:AMZN)
Number of Hedge Fund Holders: 286
Amazon.com, Inc. (NASDAQ:AMZN) operates as a technology conglomerate with core interests in the ecommerce business. Just like rival Microsoft, the quantum computing efforts of Amazon are led by the cloud division of the firm. Amazon Web Services (AWS) offers quantum computing solutions through the Amazon Braket brand. This brand focuses on providing businesses, researchers, and developers access to quantum computing resources in the cloud. The financial success of Amazon Braket is one of the reasons why the firm features on the list of best quantum computing stocks according to hedge funds.
AWS also collaborates with companies like NVIDIA to improve quantum and classical computing integration, highlighting an official commitment to supporting scalable quantum computing solutions. Braket serves as a platform for testing quantum hardware, developing quantum software, and conducting research using diverse quantum processors, such as those from IonQ, Rigetti, and QuEra
AWS is the cloud market leader, beating the products of rivals like Microsoft and Google. Quantum computing prowess helped the cloud division of the firm post a revenue of over $27.4 billion in the third quarter this year, an increase of 19% year-on-year. The latest increase also means that AWS has posted year-on-year growth for five consecutive quarters.
While we acknowledge the potential of Amazon.com, Inc. (NASDAQ:AMZN) as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than Amazon.com, Inc. (NASDAQ:AMZN) but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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