Prediction: Two Quantum Computing Stocks Poised to Capitalize on AI by 2025

Quantum computing is rapidly gaining attention as a key area for investment. It’s understandable why many investors want to enter this promising technology sector. However, it's important to note that the practical applications of quantum computers may still be years away.

Nonetheless, some quantum computing stocks represent solid investment opportunities today. Here, we explore two companies that may benefit significantly from the rise of artificial intelligence (AI) in the coming years.

Alphabet: A Leader in AI and Quantum Computing

Alphabet (GOOG -0.54%) (GOOGL -0.49%) has recently launched a new quantum computing processor known as Willow. This innovative chip significantly minimizes computing errors and meets important computational benchmarks.

The company reported that Willow "paves the way to a useful, large-scale quantum computer," highlighting that it was developed in Alphabet's advanced fabrication facility located in Santa Barbara, California—one of the few such facilities globally.

Willow may represent a breakthrough for Alphabet. The company anticipates that quantum computing will eventually enhance the scalability of AI, broadening its potential applications. While these advancements may take years to materialize, Alphabet is already experiencing success in the AI domain.

The Gemini chatbot is currently accessible to paid users of Google Workspace, and its upcoming version is expected to improve AI functionalities. This upgrade is expected to facilitate hands-free AI assistance integrated into smart glasses, as well as AI agents carrying out tasks like online shopping.

Despite some initial setbacks, Alphabet successfully merged Gemini into its search engine, instantly providing AI assistance to millions of users. A significant portion of Alphabet's revenue—approximately three-quarters—stems from advertising. By enhancing user engagement with helpful Gemini summaries, Alphabet is likely to secure its advertising revenue effectively.

Microsoft: A Strategic Player in AI with Quantum Computing Services

Microsoft (MSFT -0.51%) has made substantial progress in the AI arena, particularly with its early investment in OpenAI, the creator of ChatGPT. Over the years, the collaboration has evolved, granting Microsoft access to top-tier AI models and strengthening its position as a crucial cloud computing provider.

Recent results illustrate the impact of Microsoft’s initial AI investment. Its AI offerings boast an impressive annualized revenue run rate of $13 billion, marking a significant 175% increase.

However, Microsoft aims to do more than merely incorporate AI chatbots into its solutions; it is also advancing in the quantum computing sphere. A prime example is the Azure Quantum Cloud, which enables users to access quantum hardware and develop and optimize quantum algorithms.

Microsoft collaborates with several leading quantum computing firms, including IonQ, Quantinuum, and Quantum Circuits, to provide hardware access through Azure Quantum Cloud. As the second-largest cloud computing provider (trailing only Amazon), holding 20% of the market share, Microsoft’s strategic moves into quantum services position it well for future opportunities as demand in this sector rises.

Building a Strong AI Foundation for the Future

Both Alphabet and Microsoft have diligently established their standing in AI and quantum computing. While there is still ample work ahead, these companies are poised to capitalize on the growing demand for advanced AI services, thanks to the groundwork they have already laid.

Both stocks appear to be promising investments right now. However, if a choice must be made, Alphabet may be the more attractive option, particularly given its forward price-to-earnings ratio of just 21, which is considered very good and lower than that of the S&P 500.

quantum, computing, AI