We recently published a list of 11 Best Quantum Computing Stocks to Buy Right Now. In this article, we are going to take a look at where Alphabet Inc. (NASDAQ:GOOGL) stands against other best quantum computing stocks to buy right now.
Quantum computing continues to advance rapidly, which has been helping businesses get new opportunities related to security, AI, optimization, and scientific discovery. As per PwC, the increasing recognition of quantum computing’s potential to revolutionize numerous industries has placed the momentum for significant breakthroughs. For example, quantum simulations in healthcare enable scientists to model complex molecular interactions, which helps in ramping up the discovery of new drugs and materials.
Therefore, quantum has the potential to advance complex problem-solving, speed up the scientific discovery, and lead to the development of entirely new technologies. PwC believes that quantum possesses numerous implications for operational, R&D, and security and controls.
What Lies Ahead for Quantum Computing Industry?
As per Stellar Market Research, quantum computing use cases are expected to have a hybrid operating model, representing a blend of quantum and traditional high-performance computing until around 2032. For instance, a quantum-inspired algorithm can result in improvements in traditional high-performance computers. Fortune Business Insights believes that the quantum computing market growth is expected to be fueled by advanced problem-solving, AI advancements, and global investments.
Commonwealth Scientific and Industrial Research Organisation (CSIRO) mentioned that the United Nations has designated 2025 to be the International Year of Quantum Science and Technology. Over the upcoming years, quantum chips are expected to scale up. Furthermore, the next generation of quantum processors are expected to be supported by logical qubits. Through the use of quantum simulations on normal computers, the researchers continue to develop and test numerous quantum algorithms. When the quantum hardware catches up, this can make quantum computing ready for useful applications, says the firm.
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Our Methodology
To list the 11 Best Quantum Computing Stocks to Buy Right Now, we sifted through several online rankings to shortlist the companies catering to the broader quantum computing sector. Next, we chose the ones that are popular among the hedge funds. Finally, the stocks are ranked in ascending order of their hedge fund sentiments, as of Q4 2024.
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 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
A laptop and phone open to Google’s services in an everyday setting.
Alphabet Inc. (NASDAQ:GOOGL)
Number of Hedge Fund Holders: 234
Alphabet Inc. (NASDAQ:GOOGL) is a leading player in the quantum computing industry through Google Quantum AI, which is its dedicated research division having emphasis on developing quantum processors, applications and algorithms. Furthermore, the company announced Willow, which is the latest quantum chip. Willow managed to perform a standard benchmark computation in less than 5 minutes which will take today’s fastest supercomputers 10 septillion years. With the help of Willow, Google’s researchers mentioned that adding more physical qubits to a quantum processor made it less error-prone, which means it is reversing the typical phenomenon.
Alphabet Inc. (NASDAQ:GOOGL)’s announcement of Willow is expected to significantly enhance computing power and AI capabilities, resulting in allowing Google to differentiate its cloud services with the help of advanced hardware offerings. As we know, one of the critical problems with quantum computing is that it is error-prone, mainly with the more qubits it uses. Alphabet Inc. (NASDAQ:GOOGL) seems to be addressing this issue, saying Willow has the potential to exponentially reduce errors as it scales up using more qubits. While quantum-powered AI can strengthen the company’s AI leadership, quantum cybersecurity solutions are expected to protect Alphabet Inc. (NASDAQ:GOOGL)’s ecosystem.
Qualivian Investment Partners, an investment partnership focused on long-only public equities, published the Q3 2024 investor letter. Here is what the fund said:
“Alphabet Inc. (NASDAQ:GOOGL): Q2 2024 revenues and EPS beat expectations, with total revenues growing 14%, Search ad revenues growing 14%, YouTube ads growing 13%, and Google Cloud revenues growing 29%. Revenue growth in the quarter constituted a continued sequential improvement from earlier quarters in the year, suggesting a continued rebound in Alphabet’s core business except for YouTube ad revenues, which missed expectations and showed deceleration in the growth rate as compared to Q1 when it grew 21%. Operating margins improved by 310 bps vs. the same quarter last year.
Management continued to highlight developments with their generative AI program, which is seen as a foundational platform with opportunities across their businesses but particularly in search and cloud. However, this comes with material capex investment well ahead of the expected economic benefits from Gen AI, and the level of spending is leading investors to worry about the ROI on that spend for Alphabet, as well as the other hyperscalers (Microsoft and Amazon). We continue to have confidence in Alphabet’s ability to generate strong revenue, earnings, and cash flow growth well above the S&P 500’s in the years to come and view it as a core holding for the long term.”
Overall, GOOGL ranks 2nd on our list of best quantum computing stocks to buy right now. While we acknowledge the potential of GOOGL as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than GOOGL 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 is originally published at Insider Monkey.
