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Want to Invest in Quantum Computing? These 3 Stocks Are Great Buys Right Now.

Quantum computing has attracted widespread attention in recent years. This emerging technology could unleash computing power in a way the world has never seen before, allowing machines to handle some unusual and extremely complex types of calculations that are beyond the capabilities of today’s fastest supercomputers. This could lead to major advances in drug discovery, materials science, cryptography, and more.

However, the technology is currently not commercially viable in general.

Current quantum computers are more error-prone than classical computers. Traditional computers and digital systems store and manipulate data in the form of bits, which can only have two states: 0 or 1. Quantum computers perform calculations using qubits, which can briefly occupy a state called a superposition, in which their values ​​are neither 1 nor 0, but complex probability amplitudes.

This doesn’t mean that the qubit has a value between 1 and 0 – frankly, the reality is much stranger and not intuitive at all, and we don’t need to delve into the details further here. But when calculations using qubits are completed, these probabilities resolve and each qubit has a value of either 1 or 0.

The key difficulty, however, is that qubits are extremely sensitive to disturbances from even the tiniest external forces. Stray particle interactions can cause a qubit that correctly resolves to 0 to end up as 1, changing the value of the entire result. Reducing the frequency of such errors and correcting them when they occur are two major challenges facing every organization trying to develop viable quantum computing systems.

Artist's rendering of quantum computing.
Image source: Getty Images.

Think of a qubit as a spinning coin: a small change in its surroundings could cause it to land heads instead of tails. At the same time, groups of qubits need to be connected through entanglement to solve processing problems together, which only adds to the complexity because they need to remain relatively stable.

In other words, it’s not about keeping one spinning coin safe from outside interference, but rather trying to keep hundreds or thousands of spinning coins balanced so that they can interact with each other. Wobbles caused by things like temperature changes or small vibrations can cause the system to provide erroneous results.

Many companies pursuing quantum computing are looking for different ways to solve these problems and ultimately create a powerful, commercially viable, fault-tolerant quantum computer—one that can reduce error levels to manageable levels and can identify and correct errors that do occur. Most pure play businesses generate little revenue, no profits, and negative free cash flow, making them extremely risky bets.

However, there are other ways to invest in the space, as some large tech companies with well-established core businesses and deep pockets are also chasing the technology. From my perspective, these three larger Quantum stocks look like buys right now.

International Business Machines Corporation (NYSE: IBM) is one of the most interesting big companies involved in quantum computing. It’s not just dabbling in the space, either – it’s making technology a central part of its strategy.

Today, it is developing two quantum chips. Nighthawk is its workhorse chip, which the company plans to use to run advanced simulations in the IBM Cloud over the next few years. By 2027, the chip is expected to perform calculations with as many as 10,000 logic gates, the company said.

At the same time, it is developing a more experimental chip called Loon that could help it create the world’s first large-scale fault-tolerant quantum supercomputer.

In addition to chips, the company is focused on developing error mitigation tools that can improve the accuracy of quantum computer calculations. It has also created a powerful software stack through Qiskit solutions that will help programmers leverage quantum computers to handle real-world workloads. This all makes IBM a potential big winner as the technology matures.

Neither NVIDIA (NASDAQ: NVDA) nor letter (Nasdaq: Google)(Nasdaq: Google) Best known for their position in quantum computing, but they are also actively involved in it.

Alphabet achieved a breakthrough in late 2024 with its Willow chip, which was able to exponentially reduce errors as more qubits were added. Typically, the more qubits a system uses, the more errors it can make, so this is a huge feat.

The company doesn’t issue press releases about every quantum advancement, but you can bet it’s doing a lot of work behind the scenes. After lagging behind in the early stages of the development of artificial intelligence (AI), it quickly made progress and caught up with the leaders, which shows that its research and development capabilities should not be underestimated.

Then there’s Nvidia.

Its graphics processing unit (GPU) is arguably the most powerful parallel processor in the world, but the company has not tried to develop its own quantum chip in-house. Instead, it aims to provide systems that bridge traditional and quantum computing.

It recently released NVQLink, which allows quantum processors (QPUs) to connect with GPU clusters to effectively control quantum machines and help with real-time error correction. Nvidia is also developing an open source software platform for quantum computing called CUDA-Q based on its GPU CUDA platform, and has launched a hybrid quantum traditional system that combines a CPU (central processing unit), GPU and QPU.

Nvidia also has a lot of cash on its books, so if any pure play companies start to make significant progress, it has the wherewithal to acquire them via acquisitions if it wants to.

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Geoffrey Seiler works at Alphabet. The Motley Fool owns and recommends Alphabet, International Business Machines and Nvidia. The Motley Fool has a disclosure policy.

Want to invest in quantum computing? These three stocks are worth buying now. Originally posted by The Motley Fool

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