GET IN EARLY! Top 3 Quantum Stocks that are Better Than Nvidia

So if you had bought $5,000 in NVIDIA 10 years ago, it would be worth around $230,000 today. But while we've seen a historic rise in that and other AI stocks, if investors only focus on the already big AI stocks, you could miss the bigger opportunities that are just getting started in a new tech area, quantum computing stocks. So I found three quantum computing stocks that are small enough to still have room to grow while actually showing some pretty solid reasons behind why they could double or triple in price while AI stocks like NVIDIA take the spotlight. As we go, I'll also talk about how each stock covers one of the three biggest product areas of quantum computing. Because when it comes to picking great stocks, it's important that we understand a company's products and not just their numbers. Massive growth happens when a company has the perfect product in a quickly growing market before that market appears, like NVIDIA. Which is why I'll also be sharing my five years of experience advising Fortune 500 companies on emerging technologies, including quantum, to give my opinion of each company's products and not just their stock price. So our first stock works right at the bottom of the quantum stack, designing the physical quantum computers that are driving this whole market. This is important to investors because one of the big reasons NVIDIA stock price has risen so rapidly is because their GPUs have become the backbone of AI training and data processing. But as we push the limits of what classical computing can handle, the next frontier is quantum computing. A market expected to grow at a staggering 32% compounded per year and potentially reaching $170 billion by 2024. So IonQ is a small under the radar company that I recently bought shares in that is quietly leading the market in building quantum computers using their precise trapped ion technology. And this company is working to unlock billions of dollars by building a new type of quantum computer. So we can think of a classical computer as being made up of a bunch of Lego blocks representing bits. Each block or bit is like a switch, a one or a zero, the basic building blocks of a computer. But quantum computers introduce a new magical Lego block called a qubit, which can be a one, a zero, or both at the same time. This new type of block is really useful for solving certain kinds of problems. They can run simulations, billions, trillions, or even septillions of times faster than classical computers. And so problems that we consider impossible today suddenly become possible with a powerful enough quantum computer. This will revolutionize pharmaceuticals with protein folding, solve huge problems in logistics and shipping, and give their owner the ability to hack any computer on earth in an instant. Companies should start investing in quantum computing now. Quantum computing has the potential to revolutionize logistics. The encryption that's shielding Bitcoin could be compromised by a quantum computer. Could hack into financial transactions, medical records. But wait, wait, wait, wait, we're getting ahead of ourselves. It's easy to get excited about the potential of quantum computers, but as investors, we need to look at where the value is getting created. So there are two big problems that companies are racing to solve in the quantum space. And the company that solves them stands to become the leader in what will one day be a trillion dollar industry. So those two problems are precision and scaling. So let's start with precision since that's where IonQ stands out the most. Quantum computers are incredibly sensitive. At tiny scales, things move really unpredictably, making control a big problem. It's like trying to stack Lego blocks on a trampoline. There's just so much bouncing that it's hard to keep things together for long. You can partly fix this by just cooling the computers down to super cold temperatures to make them more stable. Kind of like damping how much the trampoline bounces. But as you make the computers more and more powerful, kind of like building a bigger and bigger Lego tower on the trampoline, the more likely something is to break. So how can we make computers precise enough to do math and solve big complicated problems with all this randomness happening? Well, IonQ has taken a unique approach by using trapped IonQ bits, which are more stable and reliable than the competition. They built a system that uses atoms locked in place with systems of lasers to control them. Kind of like super gluing your pieces of Legos together on your trampoline. That makes their quantum computers much better at solving tricky problems without introducing errors, especially in industries like healthcare, defense, and finance, which is why they're getting so much interest in those areas. But these trapped IonQ bits also help them with the second problem in quantum, scalability. So I've worked as an engineer for a while and I have seen so many prototypes that claim they're about to change the world. Most never do. And that's because it's easy to solve a problem on paper, but it's way harder when a product has to stand up to real world situations. So with quantum computers, it's not enough to have a couple qubits that can do some neat tricks. You need to have a path to scale to a theoretically infinite number of qubits. Kind of like how classical computers grew into a multi-trillion dollar industry. And IonQ's design actually sets them up pretty well for this. Their trapped Ion technology is designed to scale from one qubit up to hundreds by locking each new atom into a chain in a straight line. They've so far shown that this can work up to 79 qubits, but the stability of this platform should be able to handle a lot more. And as they scale up the size of these lines, which they call chains, since they don't use physical wires, they can communicate between qubits much faster than traditional computers. And this scaling of their systems seems to be on track. With the company announcing a huge technical milestone in early 2024, when they achieved 35 algorithmic qubits a year ahead of schedule. These algorithmic qubits measure not just the physical number of atoms, but how they can be combined in a real world computer. So you hear all this about quantum computers, but sometimes it can be hard to tell what do all these technical achievements really mean. So with early tech like this, ultimately I think one thing matters. Are people willing to give them money for the technology today? So IonQ is still what I would call a research and development company. They do have some revenue, which has actually doubled in the past year, but they aren't yet profitable. And they are burning through cash as they develop their latest IonQ Fort computer. But unlike a lot of small quantum companies, IonQ does have a real product that we can actually test right now. They've begun partnering with the major cloud providers to begin allowing developers to try out their systems, building their own tools on top of well-known software development kits to make it easier for programmers to get started. So I actually tested it out and I thought it was pretty cool how you could basically program stuff today that can run on an IonQ system. Now the stock is very volatile. It's worth less than $10 billion and it's up over 250% in the past year. So it is a more risky stock, but I felt comfortable enough to take a small position in the company. But sometimes the biggest money in a new industry isn't made by the most public companies. So over the past five years, while every small tech company has slapped AI onto their name, there's been a whole class of companies that sat back and quietly made a fortune, building the hardware for testing and manufacturing the chips, driving the AI boom. And they're gearing up to play a similar role in quantum. So as you're studying a new industry like quantum, it's important to pick the best research tools to help you out, which is where this video's sponsor, Moomoo, comes in. If you're a Robinhood graduate looking for a brokerage app with more advanced research tools to dive deeper into trading, Moomoo is a perfect choice. Moomoo is a rapidly growing trading platform with over 24 million users worldwide. And what's amazing about the app is it offers a range of tools that are hard to find on other brokerages. It's like a one-stop mini library that helps you conduct your research more efficiently. 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Terms and conditions apply, but this promotion won't last forever. So sign up using the link below to claim your rewards. What's better than some free stocks? But now let's move on to the second quantum stock on our list that is quietly making a fortune, building the hardware for testing and manufacturing the chips of the future. So if quantum computers are like the engines of the future, Teradyne is the mechanic that ensures everything runs smoothly. Teradyne doesn't build quantum computers themselves. They make the testing and automation systems that ensure quantum hardware like processors and chips work reliably and can scale to meet growing demand. And they do this in two key ways, testing and automation. So imagine you're designing the world's most advanced orchestra where every musician needs to play in perfect harmony. Well, quantum processors are kind of like the musicians. They need to work together with incredible precision to create something incredible. But if even one musician is out of tune, it ruins the entire performance. And that's where Teradyne comes in. You can think of Teradyne as the conductor with the sharpest ears, testing every single musician before the concert begins. Their job is to make sure that every part of the processor is flawless. There's no missed notes and there's no mistakes so that the final product performs perfectly. Only with Teradyne, the testing is all automatic. This market of automated test equipment is a $10 billion per year market, but it's expected to more than double in size by 2032. And it's not this huge pool of companies. Teradyne is one of the two biggest companies in the space along with Advantest. But quantum processors aren't quite the same as traditional ones that might be used for AI, for example. And they come with some unique challenges. For one, it's still a developing technology where a lot of companies are still experimenting with what shapes and sizes end up working best. And they are also far more sensitive to noise and defects. Teradyne specializes in testing processors with the extreme level of precision needed for quantum chips, something that not every semiconductor tester can do. And that's what makes me really excited about Teradyne is they have this ability to tune all kinds of these quantum orchestras so that whichever type of processor ultimately ends up winning, there's a good chance that Teradyne's business will benefit. But testing quantum processors is only one piece of the puzzle. To keep up with the growing demand for quantum computers, factories need to be able to assemble chips faster and in much larger quantities. One way to fix this, robots. Teradyne develops robotic systems to automate production lines, speeding up the process to make chips while maintaining quality. Now experts think the quantum computing market could 10X in size over the next decade, growing by 30% per year to reach $18 billion by 2030. So the work of building all these chips will likely fall to whichever companies already have the equipment and the expertise in place to start making those chips quickly. The stock price is relatively flat over the past few years and the stock trades at a fairly reasonable valuation for their industry. So it might not take too much to lift the stock's price over the next five to 10 years. Now I'll address the comments now that this isn't technically a quantum stock. I mean, they don't hype themselves up with AI or quantum or really any other specific use case. Teradyne instead is just laser focused on providing the best products that they can for their customers. But I'm betting that quantum will become a long-term boost for this company. And the stock is included in the Defiant Quantum ETF, which is a basket of stocks for investing in quantum technologies. But as important as building the computers is, software is what will ultimately make them run. So this next stock is bridging the gap between the raw power of quantum computers and the practical solutions that businesses need. So this stock's exciting because they operate at the highest level across three very different areas of quantum. And even though this is technically a private company, I'll show you how you can still get in on this game-changing stock. So starting with software, Quantinuum's claim to fame is developing the TCAT tool set. This is like a toolbox that software developers can use to program on quantum computers without needing to be experts in quantum mechanics. So fair warning, I struggled to come up with a great analogy here, but software devs, let me know how this one went in the comments. So if a quantum computer is like an off-road car designed to explore difficult areas, Quantinuum's TCAT software is like the steering wheel that lets you control what the car is doing. It takes incredibly difficult quantum problems that humans can code, like optimizing global supply chains or simulating molecules, and maps out the most efficient path for quantum computers to solve them. Now, they aren't the only company working on toolkits like this. IBM has their own that I talked about in my last video, but what's unique about Quantinuum's approach is they're trying to make their TCAT software completely hardware agnostic. It works with quantum computers from companies like IBM, IonQ, or Rigetti. They make it so that you can take their steering wheel and use it with any car, regardless of the maker model, which is super useful since you're not locked in to using only one quantum company's computers with your code. Quantinuum has also recently launched their LAMBEC toolkit, which lets you interact with quantum computers via natural language, like telling chat GPT what you want the computer to do. And Kermit, which is a software system for quantum error mitigation, which we talked about before, is a key problem to making quantum computers more useful. This company is really pushing out a lot of quantum software tools, which is why over 500,000 developers have downloaded TCAT so far. And while it doesn't have the same reach as IBM's tools yet, that is still pretty impressive for a small company that doesn't own their own cloud platform like the big hyperscalers do. But even more important than the software is how Quantinium fits into the overall ecosystem as a whole. So while many companies in the quantum space are racing to grab market share with their own hardware, they just focus on their open source quantum toolkits. And then TCAT works with everything, ranging from IBM's superconducting qubits to IonQ's trapped ion technology. But even more importantly, they're also actively collaborating with every industry leader that they can. They've partnered with Infineon Technologies to develop better parts for quantum computers called ion traps. They've worked with Microsoft for decreasing error rates on logical qubits. Heck, IBM went further and they just invested directly in Quantinium because they are technically a private company and they don't have the same pressure to beat the competition and make profits in the short term. And because of this, because Quantinium is not tied to any single technology for building quantum computers, superconducting qubits, trapped ion technology, they get to skip the riskiest part of this still developing market. So whichever technology wins out, Quantinium just gets to grow with their partners at the overall rate of the quantum market, which is a growth rate that I would be very happy with. But the biggest reason that I like Quantinium isn't the software they're making or even the benefits they're bringing to the ecosystem, it's the super unique position the company has to take advantage of new improvements in the quantum space. So Quantinium was originally created by merging Honeywell Quantum Solutions with a company called Cambridge Quantum, ultimately forming the world's largest standalone quantum company and one that has a ton of cash. The company has since received backing from some pretty heavy hitters, including JP Morgan Chase, Mitsui, and Amgen. But the most important investor to outside investors was last year when Honeywell poured an additional $300 million into the company, giving it a $5 billion valuation at the time. And that is more than recent quantum high flyers, D-Wave, Rigetti, and IonQ combined at the time. Now this also means that Honeywell now owns the majority of the company, around 54%. And it means Quantinium can benefit from Honeywell's deep expertise in high precision industrial equipment, their super deep pockets for investing into research and development in quantum, and maybe most usefully, Honeywell's existing relationships and trusts with all the big industries. They are one of the biggest players in aerospace, energy, healthcare, and logistics, all of which are industries that Quantinium would love to enter. And those existing contracts could provide a huge advantage to Quantinium and their partners as the technology matures. Now, since Quantinium isn't a public company, we can't invest in the stock directly, but we can estimate its value based on comparable public companies, which would put its value around $20 billion today. So considering Honeywell owns 54% of the company and Honeywell's value is just under $150, that means Quantinium makes up around 7 1⁄2% of Honeywell's value. So if we buy Honeywell stock, we get 7.5% exposure to Quantinium as well. Now, this obviously isn't a pure quantum play, like iOnChew, for example, but considering Honeywell is rated as one of the cheapest stocks in the industrial space, any big breakthroughs from Quantinium could result in a significant price rise for Honeywell as well. Without exposing investors to the same risk as investing directly in a smaller quantum stock. But fun fact, one of the biggest use cases for quantum is actually going to be creating even better AI models. So check out this video for the top four AI stocks that are better than Nvidia.