For early next year, there are a few quantum computing stocks to watch. I expect that these companies will perform well throughout 2024. This is due to these companies’ continued development and the gradual roll-out of their development road maps.
If you weren’t aware, quantum computing companies are set to disrupt numerous industries with their technologies. These industries range from healthcare through to economic research and everything in between. The enormous leap in processing power will allow us to model previously impossible processes in classical computing. Due to this fact, there has been a heavy interest by institutional investors in the space, and an arms race between companies to release the first commercialized quantum system is underway.
So if you are looking to add some disruptive growth stocks to your portfolio, then read on. Here are the quantum computing stocks to watch for 2024.
IonQ (NYSE:IONQ) is a company solely dedicated to quantum computing. This is an important point, as many companies in the industry are instead huge corporations that have dominated the space for decades or even longer. The upside potential for IONQ is then increased due to its relatively smaller market cap, which implies a higher potential upside if one’s investment thesis plays out.
Right now, there’s a strong case to be made for investing in IONQ, at least based on its quarterly reports as well as some of its financial highlights throughout the year.
For example, since 2021, IonQ has exceeded its goal of $100 million in cumulative bookings. It has also received $26.3 million in new bookings in the third quarter, totaling $58.4 million year-to-date for 2023. Although it’s currently unprofitable from a cash flow perspective, it reported $6.1 million in revenue for Q3 2023, marking a 122% increase from the previous year.
Finally IONQ’s price-to-sales ratio of 88.72 is significantly lower than its trailing ratio, which means that it’s undervalued on a forward basis as well as one of those quantum computing stocks to watch.
Quantum Computing (QUBT)
Quantum Computing (NASDAQ:QUBT) is another company that’s dedicated to offering quantum computing services. This company differentiates itself from others, though, as it offers quantum processing units as well as cloud-based software.
I believe the future of quantum computing stocks will be in the cloud. This leverages an already established trend in tech and also makes quantum-based services from companies like QUBT significantly more scalable. Once fully commercialized, there could also be substantial demand from its projected core base of customers, such as scientific researchers, governments and the industrials sector.
There are numerous reasons why I’m bullish on QUBT. A few of them include that last quarter, it reported approximately $50,000 in revenue with a 53.0% gross margin. The revenue might be low, but such a young company’s gross margin is very high. Five product releases supported this expanded manufacturing and the commencement of quantum chip facility construction that will scale its revenues (and, ultimately, earnings) higher.
Wall Street also agrees that QUBT will outperform in the next 12 months, as it currently has a consensus “Strong Buy” rating.
Microsoft (NASDAQ:MSFT) is my final pick for quantum computing stocks. I’ve maintained my bullish stance on MSFT since it entered the quantum computing space.
If you weren’t aware, MSFT is building one of those comprehensive quantum computing ecosystems with its Q# framework, similar to how it revolutionized the software development landscape over a decade ago with .NET. This new ecosystem is up and running now, and thousands of developers are learning how to build future quantum-powered applications using MSFT’s frameworks.
Then, on the hardware front, it’s pursuing a high-risk, high-reward strategy of investing more into research and development than other companies in pursuit of a more stable quantum system. This could give it a competitive edge over its peers, and with the brand’s vast resources, I’m confident it has a good chance of this becoming a reality.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.