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 IonQ, Inc. (NYSE:IONQ) 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 quantum computer on a countertop in an engineering laboratory with a technician at work.
IonQ, Inc. (NYSE:IONQ)
Number of Hedge Fund Holders: 17
IonQ, Inc. (NYSE:IONQ) engages in the development of general-purpose quantum computing systems in the United States. The surging investor interest in quantum computing has helped push the shares up by close to 200% year-to-date. It is one of the best quantum computing stocks to buy according to hedge funds as it offers pure exposure to the quantum industry and has demonstrated stronger commercial traction. For example, in the third quarter, the company posted a revenue of $12.4 million, up more than 102% year-on-year.
This performance was driven by over $63 million in new bookings by the quantum computing firm, including a $54 million contract with the US Air Force Research Lab to develop networked quantum systems. The quantum computers marketed by the firm make use of trapped ion quantum computing technology. This offers high stability and connectivity between qubits. Unlike traditional computers, which use binary units to process data, qubits process the zeroes and ones of binary units simultaneously. This speeds up processing times. To put this into context, the latest Forte Enterprise system marketed by IonQ can process 34 billion scenarios simultaneously.
IonQ has also been expanding partnerships with major companies to gain mainstream recognition. For example, the firm recently announced that it would partner with pharma giant AstraZeneca to develop quantum applications for drug discovery and development. Earlier, it had also announced a deal with software firm Ansys to bring quantum applications to computer-aided engineering. Most recently, the quantum computing company revealed that it would be purchasing Qubitekk, a firm that designs, builds and integrates the hardware and software for quantum networks.
Overall IONQ ranks 6th on our list of the best quantum computing stocks to buy according to hedge funds. While we acknowledge the potential of IONQ 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 IONQ but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.