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4 Stocks to Benefit From the Potential of Quantum Computing

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Quantum computing is emerging as the next big thing in the world of technology owing to the advantages it offers over traditional computers, especially when it comes to rapid processing of complex calculations. Quantum computers are opening up new areas of research and are predicting outcomes at a faster pace than traditional computers. This is because unlike traditional computing, where basic information is stored in binaries, that is, in ones or zeros, quantum computing holds data in the form of quantum bits or qubits, that is, in combinations of all possible states, which are also referred to as superposition.

Quantum computing can be leveraged in areas such as artificial intelligence (AI) and machine learning, allowing for increased efficiency and better outcomes. Owing to the ability to generate optimized results, quantum computing is being used across various sectors. NASA is utilizing quantum computing to find safer ways of space travel, controlling air traffic, and so on, as mentioned in a GigaOm article. In 2019, automotive manufacturer Volkswagen used quantum computers to optimize traffic flow in Lisbon, as mentioned in a press release by the company.

Since quantum computing utilizes quantum physics, that is, studying particles at the subatomic level, drug research and discovery can take a leap forward as researchers can study the properties of molecules in detail. Apart from that, the financial sector stands to benefit from quantum computing. Per a report by the IBM Institute for Business Value, quantum computing can be utilized in areas such as risk profiling, predicting and targeting as well as optimization of trading.

Reflective of the positives that quantum computing stands to offer to myriad industries, the quantum computing market is expected to continue to grow. Gartner stated that by 2025, about 40% of large companies are set to undertake initiatives related to quantum computing, as mentioned in a Wall Street Journal article. In fact, per a report by Markets and Markets, the quantum computing market is estimated to witness a CAGR of 30.2% from 2021 to 2026.

Since quantum computing hardware is expensive and hard to maintain, firms are expected to use the technology via cloud platforms. In 2019, a report by Gartner had stated that by 2023, 95% of organizations will use Quantum Computing as a Service for conducting research on quantum computing strategies.

4 Stocks to Keep an Eye On

Quantum computing is emerging as the next step of technological advancement and is set to witness growth going forward. This seems like a prudent time to keep a close watch on companies that can utilize the potential of quantum computing in the coming days. We have selected four such stocks that carry a Zacks Rank #2 (Buy) or 3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Microsoft Corporation (MSFT - Free Report) takes a comprehensive approach to delivering quantum and the approach innovates in parallel at all layers of the computing stack, including controls, software and development tools and services. The company also offers Azure Quantum, which assembles and curates several quantum resources for developers and customers across all industries.

Shares of Microsoft have risen 34.8% year to date and it currently has a Zacks Rank #2. The Zacks Consensus Estimate for its current-year earnings has moved up 3.6% over the past 60 days. The company’s expected earnings growth rate for the current year is 8%.

NVIDIA Corporation (NVDA - Free Report) offers cuQuantum, which is a software development kit of optimized libraries and tools for accelerating quantum computing workflows.

Shares of this Zacks Rank #2 company have gained 73.4% year to date. The Zacks Consensus Estimate for its current-year earnings has risen 6.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 68%.

Alphabet Inc.’s (GOOGL - Free Report) Google offers Quantum AI, which is advancing the state-of-the-art quantum computing and developing tools for researchers for operating beyond classical capabilities. On May 18, Google unveiled its new Quantum AI campus in Santa Barbara, CA, and the campus includes Google’s first quantum data center, quantum hardware research laboratories, and quantum processor chip fabrication facilities.

Shares of Alphabet have risen 64.3% year to date and the stock currently carries a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings has moved 14.3% north over the past 60 days. The company’s expected earnings growth rate for the current year is 73.8%.

Intel Corporation (INTC - Free Report) designs, manufactures, and sells essential technologies for the cloud, smart, and connected devices. Intel has been collaborating with QuTech and providing engineering resources for accelerating developments. On May 12, Intel, in collaboration with QuTech, reported that using its cryogenic controller Horse Ridge, it was able to control qubits even in low, cryogenic temperatures, which can lead to solving the problem of quantum scaling or wiring bottleneck.

Shares of Intel have risen 8.2% year to date. The Zacks Consensus Estimate for its current-year earnings has risen 3.7% over the past 60 days. This Zacks Rank #3 company’s expected earnings growth rate for the next five years is 7.5%.