Quantum computing is in major expansion mode, with the global market expected to grow from $928.8 million in 2023 to $6.5 billion by 2030, according to Fortune Business Insights. Those numbers reflect a 32.1% compound annual growth rate.
Growth-minded investors may want to keep tabs on the quantum technologies sector. Start with the term “quantum computing,” which the industry defines as “computing technology that works on the concepts of quantum mechanics like entanglement, interference and superposition,” according to Zion Market Research. Quantum mechanics comes from the physics universe as a “fundamental theory and details the physical properties of nature surrounding living organisms with the scale diving deep into subatomic particles and atoms,” Zion states.
More commercially, technologies and devices used for digitally generated commerce using quantum calculations are what’s commonly known as quantum computers. This is the realm inhabited by the following top computing companies, which offer stock investors an opportunity even if some of those shareholders don’t fully grasp the underlying tech-based products and services:
| Quantum computing stock | YTD return as of Sept. 18 |
| Microsoft Corp. (ticker: MSFT) | 38.2% |
| International Business Machines Corp. (IBM) | 6.9% |
| Nvidia Corp. (NVDA) | 201% |
| Alphabet Inc. (GOOG, GOOGL) | 56.6% |
| Honeywell International Inc. (HON) | -7.8% |
| Amazon.com Inc. (AMZN) | 66.6% |
| Intel Corp. (INTC) | 46.6% |
| Taiwan Semiconductor Manufacturing Co. Ltd. (TSM) | 21% |
Microsoft is at the leading edge of quantum computing innovation, with one of the industry’s first full-stack, open-cloud quantum computing ecosystems, which enables data engineers to create quantum applications and run them on multiple systems.
The computing giant is expanding its four-year partnership with Oracle, which will make it easier and more efficient for the latter to operate Microsoft Azure’s AI services on top of the Oracle database. Prior to the September announcement, Oracle had to use an external dashboard to run Azure on its database. Now that process is more integrated as Microsoft tightens its grip on the global cloud computing market. Azure will be the only other cloud provider to run Oracle’s database services, Microsoft CEO Satya Nadella noted in a Sept. 14 statement.
Microsoft is also doing what it can to highlight its new Integrated Hybrid feature (released last February) in Azure Quantum that “enables quantum and classical (computing) to integrate seamlessly together in the cloud, a first for our industry and an important step forward on our path to quantum at scale,” according to the company’s website.
With quantum computing developments steadily moving forward, and its Azure cloud revenues growing by 26% on an annual basis in the fiscal fourth quarter of 2023, the Oracle deal shows Microsoft’s cloud computing effort is starting to pay off. MSFT stock is up 38.2% year to date as of Sept. 18.
International Business Machines Corp. (IBM)
IBM is on the front lines of the quantum computing revolution, owning computing chips and operating systems, both of which are tied to its Quantum System One quantum computer, introduced in 2019. In June, IBM made big news in the sector by demonstrating that its quantum computers can generate specific results at a scale of 100-plus qubits, which puts IBM at the head of the line, ahead of classical supercomputing approaches.
“One of the ultimate goals of quantum computing is to simulate components of materials that classical computers have never efficiently simulated,” IBM stated in a June 14 release. “Being able to model these is a crucial step toward the ability to tackle challenges such as designing more efficient fertilizers, building better batteries and creating new medicines.”
IBM has already made big strides commercially with its efforts, as 210 entities across a wide spectrum of industries – including Raytheon Technologies Corp. (RTX), Sony Group Corp. (SONY), Samsung Electronics Co. Ltd. (005930.KS) and the U.S. government – are either currently using IBM quantum computing programs or are partnering with IBM to build more robust quantum computing systems.
IBM shares closed at $145.09 on Sept. 18, which is a 6.9% gain year to date. A big bonus is the company’s substantial 4.6% forward dividend. IBM has been a dividend power play for years, raising its dividend for 30 consecutive years.
Nvidia plays a huge role in the quantum computing market, as it’s one of the main providers of graphics processing units, or GPUs, used to power faster computing performance. The company’s DGX Quantum represents the first computing system to merge GPUs and quantum computing.
The company achieved another quantum computing breakthrough this summer with the release of what the company calls “a unified computing platform for speeding breakthroughs in quantum research and development across AI, high-performance computing, health, finance and other disciplines.” The Nvidia Quantum Optimized Device Architecture, or QODA, makes quantum computing more accessible by offering a “hybrid, open, and unified environment for some of today’s most powerful computers and quantum processors, improving scientific productivity and enabling greater scale in quantum research,” Nvidia states.
Nvidia is also engaged in a pair of real-world quantum computing initiatives, one with Rolls-Royce Holdings PLC (OTC: RYCEY) to develop more efficient jet engines and the other a collaboration with FZJ, a research institution in Germany, to construct a new laboratory specializing in classical quantum supercomputer systems.
NVDA stock could be a solid long-term play for quantum computing investors, given its outsize role in the global semiconductor market and its emerging role in quantum architecture – even if that role may not pay off for several years. NVDA closed at $439.66 per share on Sept. 18, up a whopping 201% in 2023, compared with 16% for the S&P 500.
Alphabet has buttered its bread with its online search services via Google, but it’s also laid the groundwork as one of the biggest quantum computing companies in the world with Bristlecone. The Alphabet 72-qubit quantum processor reduces data testing error rates while working seamlessly with the software applications and control electronics needed to operate in the field. In 2022, the company also spun off its own quantum computing and artificial intelligence private company called Sandbox AQ, which has started to make inroads into commercially viable sectors like GPS mapping, drug development and cybersecurity.
Alphabet’s more recent work in building more powerful quantum computing systems with expanded storage and performance should beef up its own cloud computing and artificial intelligence efforts going forward. Combined, that makes GOOGL stock another long-term pillar for sector investors, especially given its well-earned reputation as a highly profitable company.
GOOGL had a closing price of $138.21 on Sept. 18, bringing its year-to-date return to 56.6% for shareholders.
Honeywell International Inc. (HON)
Quantinuum, the quantum computing enterprise owned by Honeywell Quantum Solutions and Cambridge Quantum, recently made hardware history with the highest quantum volume measurement to date. Now, Honeywell is putting its quantum hardware/software computing power to solid use in industries like chemicals, pharmaceuticals and manufacturing, among other sectors.
Earlier in 2023, Honeywell tapped 30-year supercomputing veteran Raj Hazra as its new CEO. Hazra leads a company that’s planted deep roots in the quantum space, particularly in developing quantum computing products in the internet security, climate modeling and pharmaceutical drug sectors. Commenting on Quantinuum, which includes 350 scientists on its payroll, Hazra cited the “state of the art” engineering talent already on board at the enterprise.
On Sept. 12, Quantinuum introduced the Quantum Monte Carlo Integration engine, which tackles problems without analytic solutions, such as pricing financial derivatives and other advanced problems across business, energy, supply chain logistics and more.
Investors looking for exposure to Quantinuum’s generational talent can access it via Honeywell’s stock, which closed at $194.46 on Sept. 18, roughly the same figure as six months ago. Even with the middling 2023 share performance, Honeywell keeps advancing on the technology front, with a new manufacturing and automation partnership with American Battery Manufacturing along with a major hydrogen-fuel storage deal with the U.S. Department of Energy inked in September.
Amazon is rapidly expanding its presence in the quantum computing sector, primarily through its AWS Center for Quantum Networking, which opened in 2022. The center is taking a long-term approach to developing quantum network solutions and its Amazon Quantum Solutions Lab. Last year, Amazon also rolled out Amazon Braket, a cloud-based managed quantum computing service that researches and develops new quantum computing technologies.
Amazon is also spreading the wealth in the quantum computing sector by giving software developers access to state-of-the-art systems from key industry players like D-Wave and IonQ. Its work in reducing system errors in quantum computing and in qubits development in its Pasadena, California, lab also puts the company at the forefront of the quantum computing sector.
Amazon is yet another deep-pocketed player that can take its time developing new products, knowing that its massive revenue base – $538 billion from June 2022 to June 2023 – can buy the company’s quantum engineers all the time they need to master the market.
AMZN stock closed at $139.98 per share on Sept. 18, up 66.6% so far in 2023. That easily outpaces the Nasdaq, up 31% over the same period.
For the last half-century, Intel has been widely recognized as the largest semiconductor company in the world, especially in its groundbreaking work on building silicon transistors for super-powered computers. Now it’s taking significant steps to position itself as one of the rising stars in the quantum computing market.
In June, Intel introduced Tunnel Falls, its newest quantum computing chip. The 12-qubit silicon chip should feed into the quantum research field and help make executing quantum algorithms and applications faster and more efficient.
“Tunnel Falls is Intel’s most advanced silicon spin qubit chip to date and draws upon the company’s decades of transistor design and manufacturing expertise,” says Jim Clarke, director of Quantum Hardware at Intel. “The release of the new chip is the next step in Intel’s long-term strategy to build a full-stack commercial quantum computing system. While there are still fundamental questions and challenges that must be solved along the path to a fault-tolerant quantum computer, the academic community can now explore this technology and accelerate research development.”
Intel’s cost-efficient AI chips, which industry experts say are on par with what Nvidia offers, should continue to draw more interest in the stock, especially as demand for affordable AI chips soars. Shareholders clearly see the potential, as the stock is up 46.6% so far in 2023.
Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)
TSM has laid the groundwork for its quantum computing efforts with a five-year strategic partnership with Taiwan’s Ministry of Science and Technology. That’s the tentpole in TSM’s plan to use its new cloud computing platform to develop quantum computing applications that will one day make it to the commercial marketplace.
Couple those efforts with TSM’s standing as one of the top semiconductor companies in the world – it produces Apple iPhones and Qualcomm mobile chips, among others, and represents about 60% of global third-party chip-manufacturing output. Given the company’s double-digit annual revenue growth, it’s easy to see why Taiwan Semi could be a solid landing spot for new quantum computing investment dollars.
TSM stock closed at $88.83 per share on Sept. 18, after a short-term slowdown in share performance due to lagging semiconductor chip orders this summer. But on a year-to-date basis, TSM is up 21%, handily outpacing the S&P 500.
