IONQ and Rigetti computing have skyrocketed 600% and 1,100% respectively since 2023, but they could remain underdogs to this tech juggernaut.
Quantum computing has emerged as one of Wall Street’s hottest investment topics. Hype is guaranteed – technology can become a game changer for humanity. Even the earliest quantum computing chips are far more capable than today’s best supercomputers.
Investors are gathering in some of the companies working on technology. Aeon Q and Rigetti Computingtwo of the hottest names have skyrocketed 600% and 1,100% respectively since 2023.
Their popularity could ultimately be a story of attention on the shortcomings of chasing the flock. The benefits of these speculative startups aren’t what they once were. Instead, it’s time to look at technology for years. Here’s the reason Microsoft (msft -1.13%)) This is my top quantum computing stock to buy in 2025.
Microsoft’s achievements highlight how complex quantum computing is
Today’s computers act as a series of bits. A binary switch is a binary switch that represents one position at any time. However, Quantum Computing uses quantum mechanics. Here, Qubits (Quantum version) can represent a little combination of possibilities at the same time.
The difference translates significantly to higher computing performance. It sounds easy, but it’s very complicated.
Quantum computing is pushing the cutting edge of physics. To build the Majorana 1 quantum chip, Microsoft has developed the world’s first topo-conductor. This is a material in a physical state that is neither gas, liquid, nor solid. In other words, this technology is taking humanity to a new scientific frontier.
It’s exciting, but it’s very new and not practical yet. Today’s quantum computers are unstable, require a highly controlled environment, and make many mistakes. It may take a few years before the actual application is sufficiently improved.
Quantum Computing opportunities may be deployed in the cloud
Once quantum computing is ready for action, the market opportunities will be enormous. Report by Boston Consulting Group Last year, annual revenue opportunities in this market were estimated to be between $1 billion and $2 billion until 2030, before reaching $90 billion to $170 billion by 2040. Researchers have different estimates, but agree with the long-term trends.
Companies that win this competition must have a path to gaining the market. I love the underdog story, but IonQ and Rigetti Computing can go down the tough path.
Cloud computing has become the latest gateway to global enterprises. Most businesses rely on the cloud instead of on-premises computer systems. I don’t know why this trend can’t continue. Artificial intelligence is already driving the growth of cloud services.
Microsoft, Amazonand alphabet It owns over 60% of the global cloud market. It could potentially leverage cloud platforms to sell quantum computing capabilities.
As a result, market opportunities for on-premises quantum computer systems may be smaller than investors are aware of. In other words, we don’t see a long-term path to leadership for small, pure play companies like IONQ and Rigetti Computing.
Safer routes may be better in the long run
Microsoft is not flashy, but investors can reasonably believe it is competitive in quantum computing.
If not for the above reasons, consider the track record of virtually every company within the AI, cloud computing and technology sector. There are enormous financial resources and competitive advantages from existing products and services.
Microsoft is not a home run stock with a market capitalization of $2.9 trillion. Still, the price-to-earning ratio is 31, an estimated long-term growth rate of 12%, and buying and holding for 10 years would work.
IONQ ($5.6 billion) and Rigetti Computing ($2.5 billion) have much smaller market capitalizations, but that doesn’t guarantee anything. The companies totaled in revenue of less than $54 million last year, but the early nature of quantum computing means little recognition of how they will grow over the next few years.
When will either business make a profit? It’s about how much share dilution will be incurred by then if either business has to raise more funds along the way.
What’s great about Microsoft is that it’s a great inventory with or without this new technology. Already a world-class company, having such a high floor will make it my top quantum computing stock in the industry, at least in 2025, to decide winners and losers.
Suzanne Frey, an executive at Alphabet, is a member of the board of directors of Motley Fool. John Mackey, former CEO of Amazon subsidiary Whole Foods Market, is a member of Motley Fool’s board of directors. Justin Pope is not in a position with any of the stocks mentioned. Motley Fool has positions for Alphabet, Amazon and Microsoft, and is recommended. Motley Fool recommends the following options: A $395 phone at Microsoft for January 2026 length and a $405 phone to Microsoft for January 2026 short term. Motley Fools have a disclosure policy.
