We recently compiled a list of the 10 Best Quantum Computing Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Arqit Quantum Inc. (NASDAQ:ARQQ) stands against the other quantum computing stocks.
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 close-up of a computer chip, its intricate components safeguarding digital security.
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.
Overall ARQQ ranks 9th on our list of the best quantum computing stocks to buy according to hedge funds. While we acknowledge the potential of ARQQ 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 ARQQ 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.
