We recently compiled a list of the 10 Best Quantum Computing Stocks to Buy for 2025. 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 is a revolutionary technology that integrates quantum physics properties into a computer. This technology has the potential to revolutionize industries by solving complex issues at a rapid pace as compared to traditional computing methods. Notably, businesses across sectors, such as finance, healthcare, and transportation, continue to explore several benefits of quantum computing in a bid to have a competitive edge and fuel innovation.

Trends To Watch Out For in 2025

Heading into 2025, government aid, strategic initiatives, and legislative support for research are some of the key trends likely to fuel growth. In July 2024, US Senators John Hickenlooper and Michael Bennet highlighted the Department of Commerce’s announcement that Colorado’s Elevate Quantum was given $40.5 million in federal funding to build the nation’s leading quantum ecosystem.

Hickenlooper added that Colorado is regarded as the Silicon Valley of the quantum era, and Elevate Quantum is expected to lead. Hickenlooper went on to say that Quantum is well-placed to revolutionize medical drug discovery, supercharge AI, strengthen US cybersecurity, and support the transition to clean energy.

Also, in late November 2024, The Senate advanced the Department of Energy (DOE) Quantum Leadership Act of 2024, proposing $2.5 billion over 5 years to fuel US quantum R&D. Notably, the bipartisan bill emphasizes quantum networking, domestic manufacturing, and public-private partnerships to ramp up quantum innovation.

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Industries Likely to Benefit

The Wall Street Journal reported that quantum computers possess the potential to reduce global carbon emissions by 7 gigatons by 2035 and 150 gigatons by the upcoming 30 years, while adding up to $1.3 trillion in value to key transition industries, as per McKinsey. The rapid computational power it promises is expected to revolutionize batteries for electrification, transform carbon-heavy industrial operations, establish cleaner methods for agriculture, and help reimagine fuel’s future.

Grand View Research highlighted that the growth in the quantum computing market in the US should be driven by higher government and private sector investment in quantum technologies. This growth is likely to stem from the potential of quantum computing to revolutionize industries including materials science, drug discovery, and finance.

Our Methodology

To list the 10 Best Quantum Computing Stocks to Buy for 2025, we conducted extensive research and sifted through several online rankings. After getting the initial list of 12-15 stocks, we chose the ones that were popular among hedge funds and that analysts saw upside to. Finally, the stocks are arranged in ascending order of their hedge fund sentiment, as of Q3 2024.

At Insider Monkey we are obsessed with 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).

Arqit Quantum Inc. (NASDAQ:ARQQ)

Number of Hedge Fund Holders: 2

Arqit Quantum Inc. (NASDAQ:ARQQ) focuses on quantum-safe encryption solutions, leveraging principles of quantum mechanics. The company’s flagship product, QuantumCloud™, generates unbreakable encryption keys for secure communication. Scott Buck, an analyst at H.C. Wainwright, added that after significant investor interest in AI, the focus is expected to pivot to quantum computing as a potential leading theme for 2025 and beyond. This might also benefit Arqit Quantum Inc. (NASDAQ:ARQQ).

As Arqit Quantum Inc. (NASDAQ:ARQQ) successfully monetizes its technology and seals new contracts, its stock is expected to continue its runway, says Buck. The company is well-placed to capitalize on the evolving threat of data security breaches because of quantum computing in the future. Furthermore, as Arqit Quantum Inc. (NASDAQ:ARQQ) transitions from demonstration activity to operational licenses, its revenue stream will be bolstered. Though perpetual licenses offer upfront payments, they don’t contribute to ongoing income. However, operational licenses, despite generating lower initial revenue, should accumulate over time as more and more customers adopt the software, resulting in a steady increase in ARR.

Given improved operational results and strategic engagements in the EMEA region, the company is well-placed for significant revenue growth starting in 2025. On a related note, Arqit Quantum Inc. (NASDAQ:ARQQ) got a multi-year enterprise license contract in the EMEA region for a government end user which should result in seven figures in annual recurring revenue in total. Notably, the revenue generation is expected to commence in the current fiscal period.

Overall ARQQ ranks 9th on our list of the best quantum computing stocks to buy for 2025. While we acknowledge the potential of ARQQ 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 timeframe. If you are looking for a deeply undervalued 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.