A Simple Guide To Quantum Computing

According to IBM, Quantum computing is a rapidly emerging technology that harnesses the laws of quantum mechanics to solve problems too complex for classical computers.

Used correctly, quantum computers are incredibly fast and effective. They can perform calculations in a few seconds for which today's supercomputers would need decades or even millennia. This fact is also referred to by experts as quantum superiority.

Why Buy Quantum Computing Stocks?

Quantum computing isn’t so crazy as you think and it’s inching closer to reality.

These types of transcendent technologies are what investors need to key in on to help make their tech stock portfolio better than ever.

This will enable researchers to break new ground in areas such as pharmaceutical drug discovery, weather forecasting, cybersecurity, and computational chemistry.

It will also result in unprecedented gains for owners of quantum computing stocks.

The Best Quantum Computing Stocks

Will quantum computing be successful? That's the multi-trillion dollar question.

We're in the first innings of a long ball game if the game has even started.

Still, there are already some pioneers that are re-imagining the field.

Here are two quantum computing stocks to put on your radar:

Rigetti Computing, Inc. (RGTI)

Rigetti Computing builds and deploys integrated quantum computing systems leveraging superconducting qubit technology.

CEO Chad Rigetti has a simple and clear thesis on this space: “In the next decade, a single Rigetti quantum computer could be more powerful than the entire global cloud industry today.”

Rigetti will need the capital infusion from going public because the firm doesn’t have any positive revenue to talk about. The IPO delivered a much-needed financial lifeline and the additional $458 million in funding came after an initial $200 million was raised previously. That could also be a big con about the sub-sector, it might be years until an actual profitable income stream is built.

Whoever said that Rome was built in one day?

Quantum computing is only at the beginning of its development. It is difficult to estimate how large the market demand for this product will be. It's also uncertain how quickly Rigetti or competitors like IonQ will be able to expand their technical capabilities. This is an entirely new technological territory, so there are zero guarantees here in this tech sub-sector.

Needless to say, Rigetti is a concept stock for now. One has to believe in the underlying vision of quantum computing to place a bet here. Otherwise, it would be wise to switch to other stocks without a quantum computing business plan or corporate strategy.

IonQ (IONQ)

IonQ produces quantum hardware and software.

IonQ was faster to market than Rigetti, making it the first publicly traded quantum computer stock. Also, the company is backed by a number of influential investors including Bill Gates, Silver Lake, and Fidelity.

Unfortunately, like many SPACs these days, IonQ only exists on paper. That means there is still very little operational business. IonQ only did a few million in revenue last year and had no revenue in 2019 or 2020. In fact, free cash flow is projected to remain negative through at least 2026. Also, it will take multiple technological leaps - such as machine learning - to reach a point where quantum computing can reach mass markets and make IonQ successful.

RGTI’s market cap is only $125 million and IonQ’s is $927 million and they are cheap for a reason.

Investors aren’t willing to pay for the time it's willing to take for quantum computing to go mainstream yet.

However, if a reader is willing to invest with a 35-year view, then it would make sense to invest 1% of one’s portfolio into these names and also at a time when interest rates are trending lower.

These types of loss-makers and far-in-the-future bets work better when the cost of capital is lower. 

Expect some stock appreciation as investors start to bet on the Fed lowering interest rates.