In this article, we discuss the 11 best quantum computing stocks to invest in. If you want to skip our detailed analysis of these stocks, go directly to the 5 Best Quantum Computing Stocks To Invest In.
Considered to be a merely theoretical subject just a few decades ago, quantum computing has proven to become reality. Quantum computing is a technology that performs computation and complex problem-solving through the use of quantum mechanics, a fundamental theory in Physics. Machines that make use of quantum computing, called quantum computers, offer computational capabilities that far exceed those of traditional computers, a difference that stems from the core operating components in both these types of machines. Where traditional computers process data in the binary process of 1’s and 0’s, quantum computers make use of superposition, a fundamental principle of quantum mechanics that occurs on a subatomic scale in which a system can exist in several quantum states at the same time, to accelerate their computational speeds.
In recent years, quantum computing has become poised for growth as a viable section of the Technology industry across the globe. According to a report, the Quantum Computing Market is expected to register a 40.1% CAGR, growing to $10.6 billion by 2026. Another reason for the potential growth of quantum computing as a business section of the tech sector, is the increase of private equity (PE) investments over the past half decade, as reported by McKinsey.
Today, a multitude of the largest tech and software giants are laboring to introduce quantum computing into already existing industries, including logistics, aerospace, and artificial intelligence (AI), with the Healthcare and pharmaceutical sectors expected to be the among the first to benefit from the boundless applications presented by the technology. Some of the top companies that are working to implement quantum computing include Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and NVIDIA Corporation (NASDAQ:NVDA).
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Our Methodology
Let us now analyze our list of the 11 quantum computing stocks to invest in. We took into account hedge fund sentiments, analysts’ ratings, long-term growth potential, and fundamentals while choosing these stocks.
Why should we pay attention to hedge fund sentiment while choosing stocks? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the S&P 500 ETF (SPY). Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
11 Best Quantum Computing Stocks To Invest In
11. International Business Machines Corporation (NYSE:IBM)
Number of Hedge Fund Holders: 41
International Business Machines Corporation (NYSE:IBM) is a multinational technology company that produces, manufactures and sells computer hardware and software. The company also offers integrated solutions and services to its customers. The New York-based company ranks eleventh on our list of the 11 best quantum computing stocks to invest in.
The company’s flagship integrated superconducting quantum computer, Quantum System One, is the first circuit-based commercial quantum computer. Operating more than 20 quantum systems, International Business Machines Corporation (NYSE:IBM) boasts the world’s largest fleet of quantum computers.
In the second quarter of 2021, International Business Machines Corporation (NYSE: IBM) reported an EPS of $2.33, beating market estimates by $0.04. The company’s revenue for the quarter was $18.75 billion, surpassing estimates by $447.5 million.
By the end of the second quarter of 2021, 41 hedge funds out of the 873 tracked by Insider Monkey held stakes in International Business Machines Corporation (NYSE: IBM) worth roughly $1.4 billion.
On October 5, Credit Suisse analyst Matthew Cabral raised his price target on International Business Machines Corporation (NYSE:IBM) to $176 from $167 and kept an Outperform rating on the shares.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and NVIDIA Corporation (NASDAQ:NVDA), International Business Machines Corporation (NYSE:IBM) is a good stock to invest in.
10. Accenture Plc (NYSE:ACN)
Number of Hedge Fund Holders: 52
Accenture Plc (NYSE:ACN) is a multinational company that specializes in IT services and consulting. The Dublin-based company has a market capitalization of $216.72 billion, and ranks tenth on our list of the 11 best quantum computing stocks to invest in.
On September 14, Accenture Plc (NYSE:ACN) announced its collaboration with IonQ, a quantum computing hardware and software company, to accelerate quantum computing business experimentation in organizations throughout the globe and across multiple industries.
At the end of the second quarter of 2021, 52 hedge funds in the database of Insider Monkey held stakes worth $3.15 billion in Accenture Plc (NYSE:ACN), up from 48 hedge funds in the previous quarter with stakes worth $2.35 billion.
For the fiscal fourth quarter of 2021, Accenture Plc (NYSE:ACN) reported earnings per share at $2.20, beating estimates by $0.01. On the other hand, the company declared revenues of $13.42 billion, falling short of the estimated revenues by $0.18 million.
On September 27, Barclays analyst Ramsey El-Assal raised his price target on Accenture Plc (NYSE:ACN) to $384 from $335, and kept an Overweight rating on the shares of the company.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and NVIDIA Corporation (NASDAQ:NVDA), Accenture Plc (NYSE:ACN) is a notable stock to invest in.
Fiduciary Management, in their Q1 2021 investor letter, mentioned Accenture plc (NYSE:ACN). Here is what the fund had to say:
“Even great companies can get too expensive. In early January, we sold our long-standing position in Accenture PLC after the company’s valuation exceeded 30 times next 12 months (NTM) earnings per share (EPS). We originally invested in Accenture at the launch of the FMI International strategy at a valuation below 15 times NTM EPS and held the stock for over ten years. We added to the holding numerous times in the early years, growing the position size to as high as 5.5% in late 2014, before dialing it back in recent years as the valuation became less compelling. It is one of the world’s largest information technology services firms, specializing in helping complex, global businesses navigate disruption, and focusing on next-generation services like digital, cloud, and security. For years, the investment allowed FMI to capture the inherently higher growth of technology-related industries (GDP+) without investing directly in pure “invention-oriented” technology companies. Through Accenture we were able to avoid some of the shortfalls of tech investing: technology obsolescence, short product cycles, and subpar return on invested capital (ROIC). It grew steadily, was solidly profitable, capital-light, and generated high returns, all while maintaining a rock-solid balance sheet. It compounded its business value for many years, outperforming the MSCI EAFE indices by over 450% during our holding period. Unfortunately, the market increasingly recognized the company’s positive attributes, and the stock’s discount to intrinsic value slowly evaporated. Despite our admiration for the business, it exceeded our valuation threshold. We will continue to follow the company closely for future opportunities.”
9. Honeywell International Inc. (NASDAQ:HON)
Number of Hedge Fund Holders: 57
Honeywell International Inc. (NASDAQ:HON) is a multinational diversified technology conglomerate operating in business sectors that include aerospace and performance materials, among others. Ranked ninth on our list of the 11 best quantum computing stocks to invest in, Honeywell International Inc. (NASDAQ:HON) has a market capitalization of $150.30 billion.
Honeywell International Inc. (NASDAQ:HON), through its Honeywell Quantum Solutions segment, posted record breaking performance this year in July, with its 10-qubit System Model H1 achieving a quantum volume of 1024, the highest measured to date.
At the end of the second quarter of 2021, 57 hedge funds in the database of Insider Monkey held stakes worth $1.8 billion in Honeywell International Inc. (NASDAQ:HON), up from 56 the preceding quarter worth $1.7 billion.
On October 7, Wells Fargo analyst Joseph O’Dea began coverage of Honeywell International Inc. (NASDAQ:HON) with an Equal Weight rating and $229 price target on its shares, noting that the company is expected to grow due to the recoveries in the aerospace market.
The company issued its quarterly earnings report for the second quarter of 2021 on July 23, with reported earnings per share at $2.02, crossing market estimates by $0.07. Additionally, the revenue for the quarter came in at $8.81 billion, surpassing the predicted revenue by $146.48 million.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and NVIDIA Corporation (NASDAQ:NVDA), Honeywell International Inc. (NASDAQ:HON) is a notable stock to invest in.
In its Q1 2021 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Honeywell International Inc. (NASDAQ:HON) was one of them. Here is what the fund said:
“The portfolio’s quality bias and valuation discipline have generated compelling returns over time with typically strong relative results in more challenging environments as it did through the first three quarters of 2020. However, that same quality bias tends to create a more challenging relative performance environment for the Strategy during periods of sharp economic acceleration, which tend to benefit stocks that are more commodity linked or of lower quality. This has been the case during the vaccine- and stimulus-driven rally experienced late last year and during the most recent quarter. Sectors that lagged in the quarter included industrials, Honeywell also lagged in the quarter after previously generating strong returns over extended periods.”
8. Advanced Micro Devices, Inc. (NASDAQ:AMD)
Number of Hedge Fund Holders: 63
Headquartered in California, Advanced Micro Devices, Inc. (NASDAQ:AMD) is multinational company involved in the manufacture of semiconductors and other components for consumer electronics. The company ranks eighth on our list of the 11 best quantum computing stocks to invest in.
Recently, Advanced Micro Devices, Inc. (NASDAQ:AMD) laid down a patent that involves more efficient quantum computing architecture. Based on a multi-SIMD (Single Instruction Multiple Data) approach, the company aims to make use of quantum teleportation to increase a quantum system’s reliability, while reducing the number of qubits required to make accurate calculations.
On September 23, Piper Sandler analyst Harsh Kumar raised his price target on Advanced Micro Devices, Inc. (NASDAQ:AMD) to $120 from $110, and reiterated an Overweight rating on the shares of the company.
In the second quarter of 2021, Advanced Micro Devices, Inc. (NASDAQ:AMD) reported an EPS of $0.63, beating forecast estimates by $0.09. The company’s revenue for the quarter was reported to be $3.85 billion, an increase of 99.28% on a year-over-year basis, surpassing estimates by $237.31 million.
By the end of the second quarter of 2021, 63 hedge funds out of the 873 tracked by Insider Monkey held stakes in Advanced Micro Devices, Inc. (NASDAQ:AMD) worth roughly $4.6 billion. This is compared to 62 hedge funds in the previous quarter with a total stake value of approximately $3.7 billion.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and NVIDIA Corporation (NASDAQ:NVDA), Advanced Micro Devices, Inc. (NASDAQ:AMD) is a good stock to invest in.
7. Intel Corporation (NASDAQ:INTC)
Number of Hedge Fund Holders: 78
Intel Corporation (NASDAQ:INTC) is a California-based firm that markets technologies for smart devices and is among the worlds largest semiconductor manufacturers. Ranked seventh on our list of the 11 best quantum computing stocks to invest in, Intel Corporation (NASDAQ:INTC) has a market capitalization of $218.31 billion.
Intel Corporation (NASDAQ:INTC)’s collaboration with the Netherlands-based QuTech is focused on the design and manufacture of the Horse Ridge cryogenic control chip, with successful experimentation achieving the same results as room-temperature electronics while manipulating multiple silicon qubits.
At the end of the second quarter of 2021, 78 hedge funds in the database of Insider Monkey held stakes worth $6.7 billion in Intel Corporation (NASDAQ: INTC), down from 83 in the previous quarter worth $7.6 billion.
At the start of October, Morgan Stanley analyst Joseph Moore reiterated an Overweight rating on Intel Corporation (NASDAQ:INTC) alongside a price target of $67 on the company’s shares.
Just like Amazon.com, Inc. (NASDAQ:AMZN), Microsoft Corporation (NASDAQ:MSFT), Alphabet Inc. (NASDAQ:GOOG) and NVIDIA Corporation (NASDAQ:NVDA), Intel Corporation (NASDAQ:INTC) is gaining investors’ attention in 2021.
Alger Spectra Fund, in their Q1 2021 investor letter, mentioned Intel Corporation (NASDAQ: INTC). Here is what the fund said:
“Short exposure to Intel also detracted from performance. Intel designs and manufactures semiconductors for the computing and communications industries. Intel’s proprietary intellectual strength and manufacturing prowess versus the competition is
deteriorating, which is causing the company to lose market share and profit opportunities. The short position detracted from portfolio returns as the share price reacted positively to the announcement of Pat Gelsinger being hired as chief executive officer, a stronger-than-anticipated quarterly earnings report driven by unusually robust PC sales that we believe are unsustainable and the unveiling of “Intel Unleashed,” a new long-term program to help improve manufacturing and spur innovation. This program involves opening two fabrication plants in Arizona, which confirms Intel’s commitment to continue as an integrated design manufacturer. Importantly, Intel continues to experience issues with its next generation server chips which are disadvantaging Intel versus the competition.”
6. NVIDIA Corporation (NASDAQ:NVDA)
Number of Hedge Fund Holders: 86
NVIDIA Corporation (NASDAQ:NVDA) is a multinational technology company that designs graphics processing units alongside chip units and semiconductors for gaming and professional purposes. The California-based tech company is ranked sixth on our list of the 11 best quantum computing stocks to invest in.
At the GTC 2021, NVIDIA Corporation (NASDAQ:NVDA) revealed its cuQuantum software development kit that provides aid to researchers in accelerating quantum circuit simulators, which will result in better quantum computer designs and systems.
According to our database, 86 hedge funds out of the 873 tracked by Insider Monkey held stakes in NVIDIA Corporation (NASDAQ:NVDA), worth roughly $9.09 billion. This is compared to 80 hedge funds in the previous quarter with a total stake value of approximately $6.2 billion.
NVIDIA Corporation (NASDAQ:NVDA) last released its quarterly earnings report on August 18, with reported EPS at $1.04, crossing market estimates by $0.02. Additionally, the firm’s revenue for the quarter came in at $6.51 billion, an increase of 68.31% on a year-over-year basis, surpassing the forecast predictions by $169.08 million.
On October 5, KeyBanc analyst John Vinh raised his price target on NVIDIA Corporation (NASDAQ:NVDA) to $260 from $245, and kept an Overweight rating on the shares.
Out of the hedge funds being tracked by Insider Monkey, Scotland-based Aubrey Capital Management is a leading shareholder in NVIDIA Corporation (NASDAQ:NVDA) with 14,100 shares worth more than $11.28 billion.
In the Q2 2021 investor letter of Harding Loevner, the fund mentioned NVIDIA Corporation (NASDAQ:NVDA). Here is what the fund said:
“Within IT, shares of US-based computer chip developer NVIDIA continued their climb as rising demand across segments-from work-from-home laptops to data centers to cryptocurrency mining rigs-led to shortages that translated into surging prices for its chips. Such was the windfall that NVIDIA even made technical changes to some of its products to make them towards waht it believes are more sustainable uses. Less attractive to cryptocurrency miners, to steer scarce supply viewed by geography, the lion’s share of excess returns came from good stock performance in the US. In addition to the contributions from NVIDIA and our health care holdings, a pair of IT software and service providers also aided relative returns.”
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Disclosure. None. 11 Best Quantum Computing Stocks To Invest In is originally published on Insider Monkey.
