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Top 3 Quantum Computing Stocks for 2022

Wednesday, May 04, 2022 01:38 PM | Kyle Depontes

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Top 3 Quantum Computing Stocks for 2022

Once a little-known industry that was written off as science-fiction, quantum computing has jumped into the media spotlight in recent months as public and private entities have accelerated their investment in the space.

As quantum computing has applications to nearly every industry, including military defense and biowarfare, governments have increased spending in an effort not to fall behind competing countries. So far, the European Union and the United States have pledged $7.2 billion and $1.3 billion respectively, with China having announced a whopping $15 billion in planned government funding.

While the U.S. lags behind in government spending, it has continued its usual method of letting private businesses lead the way in innovation. U.S quantum computing companies account for approximately 60% of all global private investments, and the country has more than 40% of quantum technology startups worldwide.

All the money pouring into the space is set to radically change its footprint - global market research firm IDC has forecasted the industry will grow from $412 million in 2020 to $8.6 billion in 2027.

What is Quantum Computing?

As its name suggests, quantum computing deals with principles in computer technology associated with quantum theory - the idea that explains the behavior of energy and matter on the atomic and subatomic level.

Because current computers use transistors to process data, they only have the ability to encode information in bits that take the value of 1 or 0. As quantum computers harness subatomic particles to digest smaller bits of information, they are able to encode data in quantum bits (qubits), giving them the power to work with particles that can be 1 or 0 at the same time.

The enhanced power of quantum computers makes them superior to modern computers in two key ways - processing speed and data absorption. This means that computers of the future will be able to calculate in seconds what would take weeks for even a modern supercomputer to solve.

The rise of the technology comes at a key time in the development of modern computing devices, as engineers have struggled in recent years to get more out of traditional silicon chips. While current methods involve squeezing more and more transistors onto devices, adding a single qubit to a quantum machine can double its power immediately.

Use Cases

Quantum computing has the potential to change every industry, but it is widely agreed that the pharmaceutical, manufacturing, and finance sectors stand the most to gain from the introduction of the technology.

As previously stated, quantum computers have the ability to work with atomic and subatomic particles, meaning that they can accurately calculate and adjust molecular properties. This would rapidly speed up the timeframe of most drug trials and reduce the cost of medication as pharmaceutical manufacturers would be able to eliminate unnecessary rounds of drug testing.

In manufacturing, quantum computers would be able to assist engineers in designing more efficient products, while the technology's increased predictive modeling would allow financial analysts to make better predictions regarding economic forces.

1.) IonQ, Inc. (IONQ)

Founded in 2015 by Christopher Monroe and Jungsang Kim, two professors from Duke and the University of Maryland, IonQ went public in October of 2021 in a SPAC deal that raised approximately $650 million. After a brief decline from its initial price of $10, the stock skyrocketed to a high of $31 in November before falling back to Earth in recent weeks.

Part of IonQ's volatility can be attributed to the fact that the company has the potential to change the world, but has yet to produce any meaningful revenue. In 2020, IonQ generated no revenue, and only achieved $2.1 million in full-year revenue for 2021. This didn't stop the company from being named to TIME’s annual TIME100 Most Influential Companies list.

What makes the stock so enticing is that IonQ is the only pure-play quantum computing company on the market, with a goal of creating a 1000 qubit chip in the next five years. Researchers believe that it is only when this level of computing power is reached will quantum computers surpass the modern supercomputer delivered through the cloud today.

Client List

Even though the company is some years away from realizing its goal (IonQ expects to release a new 64 qubit chip in 2023) the company has a number of initiatives with high-profile names. Recently, IonQ and Hyundai Motor Company announced a new project designed to apply quantum machine learning to 3D object detection, while Fidelity is using IonQ to create quantum algorithms that determine the chances of a borrower defaulting on a loan.

Currently, the company’s main product is a 22-qubit quantum computer that is integrated with Amazon AWS, Microsoft Azure, and Google Cloud.

For the full year 2022, IonQ expects revenue to be between $10.2 million and $10.7 million.

2.) International Business Machines Corporation (IBM)

Unlike the first stock on this list, IBM has a lengthy history that dates back to its founding in 1924. Since that time, the company has pioneered many famous breakthroughs in computing, and it has now set its sights on accelerating the development of quantum-computing technology.

In November of 2021, IBM unveiled its new 127-qubit "Eagle" processor at its IBM Quantum Summit, which is the first quantum processor produced that contains more than 100 qubits. The deployment of the Eagle processor follows the company's 65-qubit "Hummingbird" processor unveiled in 2020, and the 27-qubit "Falcon" processor created in 2019.

IBM also released its own quantum computer in 2021, can be accessed by private companies through the company's IBM Quantum Services business unit. It will be primarily used used by the Fraunhofer Research Institute, making it the first quantum computer to be used in Germany.

Client List

IBM has leveraged its extensive footprint to secure a number of clients around the globe for its quantum computing technology.

In Japan, dozens of companies make use of IBM's quantum computers, including Toyota, Hitachi, and Toshiba. Mitsubishi Chemical also relies heavily on the technology to run simulations that aid in the creation of chemical materials. Toyota incorporates IBM's quantum computers to analyze large data sets from car trips to expand its autonomous driving initiatives.

In the U.S., IBM recently announced a deal with defense contractor Raytheon Technologies (RTX) to develop AI and quantum computing for aerospace and intelligence industries.

Overall, more than 140 research organizations and companies use IBM's quantum computing services.

3.) Rigetti Computing, Inc. (RGTI)

Founded in 2013 by by Chad Rigetti, a physicist who previously worked on quantum computers at IBM, RGTI designs quantum chips and integrates those chips with a controlling architecture. In addition, the company develops software that programmers use to build algorithms for the chips.

Rigetti went public on March 2, 2022 through a SPAC merger that infused the company with $458 million in gross cash proceeds. Despite the dismal performance of Rigetti's stock since that time, which has fallen from around $10 a share to below $7, the company has a strong track record of performance that has seen it hit a number of key milestones in less than a decade.

In February 2016, Rigetti began its first major tests of a three-qubit chip made using aluminum circuits on a silicon wafer. By May 2017, the company was testing eight-qubit computers, and by June Rigetti had announced the public beta availability of a quantum cloud computing platform called Forest 1.0, which allows developers to write quantum algorithms.

The company's ambitious, overall goals include the design a 1,000 qubit processor by 2024, and a 4,000-qubit processor by 2026.

Client List

Rigetti has worked with a number of major public and private clients in its short history, and it is currently collaborating with NASA and the U.S. Department of Energy to use its quantum-grade processors.

The company has also announced new strategic partnerships with data analytics software company Palantir Technologies and electronics manufacturer Keysight Technologies.

Insiders believe that Rigetti’s revenue will grow to reach nearly $600 million by 2026.

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