When Jensen Huang’s comments about useful quantum computing being at least 15 years away tanked most of the quantum stocks, one person must have secretly chuckled. The man in charge of the largest software company in the world, Satya Nadella, may have been the right person to ask that question. His firm has just revealed a new quantum chip, one that uses a superconductor that is neither solid, liquid, or gas! It is a new state of matter altogether!
The new quantum chip is called the Majorana 1 and it can significantly speed up the quantum processes to solve problems in years rather than decades. Chetan Nayak, a technical fellow at the Windows maker had this to say about the development:
Whatever you’re doing in the quantum space needs to have a path to a million qubits. If it doesn’t, you’re going to hit a wall before you get to the scale at which you can solve the really important problems that motivate us. We have actually worked out a path to a million.
As a result of this revelation, quantum computing stocks are surging again. If you missed the last rally, you may still have ample time to get back in. Here is our list of 5 quantum computing stocks that are hot again. To come up with this list, we only considered stocks that have a market cap of at least $500 million.
5. SkyWater Technology, Inc. (NASDAQ:SKYT)
SkyWater Technology, Inc. (NASDAQ:SKYT) operates a foundry engaged in semiconductor manufacturing in the US. It collaborates with other technology companies to co-create products. The company’s stock was up 5% yesterday after having fallen to the same levels when the previous quantum rally started in December.
The company doesn’t itself develop quantum technologies but being a manufacturer, it does provide services and manufacturing capabilities to other firms developing quantum tech. Most of the customers of the company are in industries that require highly specialized manufacturing, such as aerospace, biomedical, defense, and quantum computing. Due to this factor, companies like SKYT specialize in low-volume fabrication.
The company’s business model of co-creating products using other firms’ expertise is what makes it so attractive. By doing so, it ensures its R&D expenses and risks are low, it can leverage other technology companies’ research, and can build a steady source of revenue through a healthy product pipeline.
The company is set to announce its earnings on the 26th of February and after registering a 31% YoY growth in the third quarter, we could be at the beginning of a new bull rally spurred by the recent quantum chip developments and earnings optimism.
4. Quantum Computing Inc. (NASDAQ:QUBT)
Quantum Computing Inc. (NASDAQ:QUBT) offers quantum machines that are low-power and portable. Some of its products include a quantum random number generator that generates genuine random numbers instead of pseudorandom numbers, and quantum authentication which removes the shortcomings of traditional cryptography methods.
The company’s stock is inching up again as the company recently signed another purchase order for a research group based in Canada. The research group intends to utilize QUBT’s TFLN foundry services and this is the fifth such purchase order, showcasing how the company’s technology is receiving good feedback from peers.
QUBT also recently signed collaborations with a PIC design house in Canada and a technical university in Europe. It remains to be seen however whether the company can turn its photonics technology into a successful business. For now, the stock may be gaining but it remains a risky investment.
3. D-Wave Quantum Inc. (NYSE:QBTS)
D-Wave Quantum Inc. (NYSE:QBTS) produces and sells software, systems, and services related to quantum computing globally. Its Leap service provides users with real-time access to a quantum computer. Its quantum computer goes by the name Advantage. The stock has been slowly moving up after losing over 60% of its value due to Jensen Huang’s comments at the CES 2025 early last month.
The company’s CEO was quite vocal in response to Jensen Huang’s comments that useful quantum computing may at least be 15 years away:
Jensen Huang has a misunderstanding of quantum. While he might be right about other quantum companies, he is dead wrong about D-Wave.
The CEO will need more than just words to prove Huang wrong though. From a financial point of view, his company has liquidity issues. It recently raised $150 million via At-The-Market offering at an average price of $6.1. Currently, the stock trades just above this level thanks to the optimism surrounding the Majorana 1 quantum computing chip.
2. Rigetti Computing, Inc. (NASDAQ:RGTI)
Rigetti Computing, Inc. (NASDAQ:RGTI) is one of the many firms that make quantum computers. However, the company goes a step further and also develops superconducting quantum processors. Its business works on quantum computing as a service model by selling access to its quantum computers. The company’s stock was up 1500% in 2024 even though it struggles with profitability and revenue generation.
In the industry that RGTI operates in, commercialization and scalability are uncertain. For this reason, the market sometimes refuses to factor in this negativity and values the stock highly. This is also what makes these stocks volatile, but the opportunity for big gains also comes in such stocks. As far as RGTI is concerned, quantum computing could soon become as important as AI for the US government. The company’s first-mover advantage positions it well to benefit from any government support or investment in this field.
The company’s 2025 plans could help it sustain a bull run. In mid-2025, it is expected to release a cluster of four 9-qubit chips which should help it go past the 99.5% two-qubit fidelity level. In simpler words, this would be the equivalent of 995 out of 1000 operations being correct. By the end of the year, the company intends to launch a similar system of over 100 qubits at the same fidelity level.
1. IonQ, Inc. (NYSE:IONQ)
IonQ, Inc. (NYSE:IONQ) makes general-purpose quantum computers in the US. It then sells access to these quantum computers through its own cloud service as well as that of the major US tech companies. The company’s stock has more than doubled in a year and was quick to recover from the setback of Jensen Huang’s comments in early January.
With the earnings coming up on the 26th of February, the stock could surge again. In the previous quarter, IONQ posted a 100% YoY revenue growth, surpassing the upper end of its guidance. The company’s Q3 revenue of $12.4 million may not be significant and it cannot be denied that the lack of revenue is a big risk. However, the industry is in its early stages and research and development are more important at this stage than the ability to generate revenue.
IONQ is collaborating with AstraZeneca to accelerate the company’s drug discovery processes. A similar collaboration with the US Air Force Research Lab involves working on operating unmanned aerial systems from the ground using quantum computers. The firm’s research is on track and the recent acquisition of Qubitekk adds another 118 patents to the company’s armory, something that will come in handy when quantum computing goes mainstream.
IonQ, Inc. (NYSE:IONQ) is not on our latest list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 28 hedge fund portfolios held IONQ at the end of the third quarter which was 17 in the previous quarter. While we acknowledge the potential of IONQ as a leading AI 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 as promising as IONQ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
