Anticipation: Quantum Computing to Emerge as Dominant AI Trend in 2025, Pioneered by This Particular Stock
In the realm of tech, it's no secret that artificial intelligence (AI) is the biggest opportunity driving the sector's growth. Chipware, a crucial component of AI's development, has been particularly beneficial for semiconductor stocks. However, lately, quantum computing has been making waves as the latest buzz in the AI sphere.
Let's delve into the movement of quantum computing stocks and uncover the company lighting the path for this thrilling technology.
Quantum Computing Stocks: The New AI Sensation?
Quantum computing promises a thrilling new chapter for AI, sparking investor curiosity. Analyze the trends in the following chart to get a sense of quantum computing stocks' recent performance:
As the graph illustrates, toward the end of 2024, penny stocks such as IonQ, D-Wave Quantum, Quantum Computing, and Rigetti Computing saw spectacular run-ups. Surprisingly, each of these companies started the year with modest valuations, only to soar into the billions in a relatively short time span.
Though these skyrocketing gains may suggest that these stocks are the next big thing in AI, it's essential to approach this trend cautiously. Consider that all these companies are still in the development phase, meaning they're yet to generate substantial revenue and consistently burn cash.
Even with their seemingly low prices, valuation multiples indicate that these stocks lack merit for a hefty price tag.
Remember, there are safer approaches to gaining exposure to quantum computing.
My Top Pick for Quantum Computing Investors
Wise principles from the Gold Rush teach us that the true fortune seekers were the vendors supplying picks and shovels, not the diggers hunting for gold. Similarly, in the context of quantum computing, the following company stands out as a lucrative opportunity: Nvidia (NVDA) 3.10%.
During a recent interview at CES in Las Vegas, Nvidia CEO Jensen Huang shared his thoughts on quantum computing's timeline. Huang revealed that he believed it would take approximately 20 years for quantum computing to be scaled on a large scale.
While his perspective may imply that progress in the industry will be slow, it offers opportunities. For companies like IonQ, Rigetti Computing, D-Wave, and Quantum Computing, Huang's comments suggest that there's still a long way to go before any of these businesses can achieve significant growth.
During this interim period, it's likely that each of these companies will persist in spending considerable amounts on research and development, continuing their cash-burning operations.
However, a silver lining lies in this challenge.
Nvidia stands out as the ideal “pick and shovel” player in quantum computing development. The company provides graphics processing units (GPUs), data centers, and software – all essential parts of quantum computing's infrastructure.
In essence, Nvidia's hardware and software will be indispensable, regardless of which companies ultimately make breakthroughs in quantum mechanics.
Given the seemingly long horizon before quantum computing reaches scale, Nvidia is well-positioned for continued growth. Buckle up, growth investors or those seeking deep exposure to AI applications; Nvidia offers an attractive opportunity for a prolonged investment journey.
Investors looking for a safer approach to quantum computing might consider investing in companies that provide essential components or services, such as Nvidia, which offers graphics processing units (GPUs), data centers, and software. Despite quantum computing companies' promising performance, their high valuation multiples suggest that they may not yet justify a hefty price tag due to their stage in the development process.
With quantum computing still in its early stages and the potential for these companies to continue burning cash on research and development, investments in companies like Nvidia, which provide the necessary infrastructure, may offer a more stable and long-term investment opportunity in this burgeoning field.
