Artificial intelligence (AI) continues to fuel the technology sector, with semiconductor stocks benefiting from its growth. However, quantum computing has emerged as the latest “shiny object” in AI, sparking interest among investors. Recent trends in the market suggest that shares of companies like IonQ, D-Wave Quantum, and Rigetti Computing have seen significant run-ups, with these firms going from penny stocks to billions in valuation.
While this trend may seem attractive, it’s essential to approach quantum computing stocks with caution. Most of these companies are in development stages, burning cash, and generating no significant revenue. Valuation multiples indicate that none of them is overvalued. Instead, investors should look for “pick and shovel” companies, which provide the necessary infrastructure for quantum computing.
Nvidia (NVDA 3.10%) stands out as a top opportunity in this space. As a supplier of graphics processing units (GPU), data centers, and software, Nvidia plays a critical role in the development of quantum computing. By providing these essential components, Nvidia becomes a key player in the quantum computing movement.
Unlike other companies in the sector, which are still burning cash on R&D efforts, Nvidia has an advantage due to its agnostic position in the market. Its hardware and software will likely be involved in quantum computing, regardless of which companies make breakthroughs or not.
Given that quantum computing is decades away from reaching scale, Nvidia’s long-term potential remains largely untapped. The company’s growth prospects are attractive, especially for investors seeking deep exposure to AI applications.
Source: https://www.fool.com/investing/2025/01/20/prediction-quantum-computing-will-be-the-biggest-a