Friday, February 23, 2024
Stocks To Buy

3 Undervalued Quantum Computing Stocks to Buy in February

The S&P 500 and the Nasdaq are pulling back after an astounding rally to round off 2023. These depreciating indices have opened the door for investors to pick up shares in undervalued companies, and namely this list of undervalued quantum computing stocks to buy.

Although we’re far off from witnessing the widespread commercialization of quantum computing, investors who buy into these companies early could see substantial gains from their investments. This is because quantum computing is a giant leap from classical computing, which could lead to giant leaps in our understanding of biology, economics, space and other high-tech fields.

So here are the best undervalued quantum computing stocks for investors to consider for February.

IonQ (IONQ)

IonQ (NYSE:IONQ) is a leader in quantum computing, utilizing trapped ions as qubits as its method of choice to power its quantum machines. 

I believe that now is the right time for investors to pick up shares of IONQ. The reason is that it’s positioned for strong growth throughout FY2024 and FY2025 and beyond. Wall Street believes the company’s revenues will grow 79.28% to $39 million this year, while it’s predicted to reach breakeven profitability sometime in FY2027.

Some specific initiatives are in the works by IONQ to deliver gains to investors in the short term, particularly through its partnership with Amazon’s (NASDAQ:AMZN) Braket Direct program

Amazon offers IonQ a platform to showcase its quantum computing capabilities to a wider audience, and it could potentially court new developers and users to join its ecosystem, thus strengthening its brand on two fronts.

There’s also a predicted upside of 72.24% for IONQ’s stock price within the next twelve months.

Nvidia (NVDA)

Nvidia (NASDAQ:NVDA) is also making strides in the quantum computing sector through software tools that facilitate the development of quantum applications on its GPUs.

NVDA’s position is marked by its DGX Quantum project, which claims to be, the world’s first GPU-accelerated quantum computing system. The advantage of this setup is that it seeks to combine the cutting-edge nature of quantum computing with the stability of classical computing, which could in turn make it far more usable and stable.

Another angle that NVDA stock is pursuing for quantum is with its NVIDIA Quantum Optimized Device Architecture (QODA). This again helps converge the new tech with classical quantum computing, but this time it aims to integrate future quantum processors with its base of GPUs.

NVDA stock may be seen as an expensive stock for some as it trades at around 91 times earnings, but Wall Street believes that this valuation is justified, as analysts predict that its EPS will grow 67.57% in FY2024.

Microsoft (MSFT)

I’ve previously written about Microsoft (NASDAQ:MSFT) several times here on Investorplace as being one of the best-undervalued quantum computing stocks to buy, and my position hasn’t changed.

The key part of my thesis is MSFT’s development of the Q# quantum development kit and programming language used for creating quantum algorithms. I foresee that Q# will become similar to other languages that MSFT has grown and maintained that later went on to become industry standards, such as .NET. This would give the company a clear competitive advantage over its peers if successful.

This year, MSFT is expected to continue working along its roadmap to realize a quantum machine, namely through designing a multi-qubit system capable of executing a variety of quantum algorithms, leading to a resilient machine that’s capable of robust error handling.

On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.

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