Nvidia (NASDAQ:NVDA | NVDA Price Prediction) CEO Jensen Huang had some thoughts to share about the state of quantum computing, a forward-thinking innovation that may eventually surpass artificial intelligence (AI) in hype.
While he views quantum computers as “very useful,” he thinks they’re still 15-30 years away from really taking off. Indeed, these comments alone were enough to cause the broad basket of quantum computing stocks to fall off a cliff and wipe out most, if not all, of the hype build-up when Google unveiled its quantum breakthrough with Willow.
Undoubtedly, Google’s quantum breakthrough was remarkable, but it’s one step in many that could span decades’ time before we get to an environment where the mainstream shifts gears from classical to quantum computing. Indeed, investors in the quantum names clearly don’t have an investment horizon that’s that long!
Some analysts and quantum computing firm execs were quick to respond to Mr. Huang’s needle-moving comments, with D-Wave Quantum (NYSE:QBTS) CEO Alan Baratz saying that Nvidia’s top boss is “dead wrong” about his prediction that quantum computing will potentially take decades to truly arrive. Shares of QBTS plunged just north of 36% in a day, marking a sharp turn for a firm that’s been melting up since November.
Is there still hope for the quantum trade?
However, there is some hope for the quantum trade as we know it. A big-name analyst on Wall Street had some things to say about quantum carnage in a recent chat with Investor’s Business Daily. DA Davidson analyst Gil Luria stated that quantum computing is an “existential threat” to Nvidia and that Huang’s comments “may have been somewhat self-serving,”
Luria is right about that. The only kind of hardware more impressive than Nvidia’s latest and greatest graphics processing units (GPUs) is likely something in the quantum realm.
Though there’s no denying Jensen Huang is a genius who saw the artificial intelligence (AI) boom coming for a long time, I’m not so sure his words are to be taken as gospel. That said, I do acknowledge that many futurists do believe that quantum will take time (perhaps decades) to enter its prime.
Nevertheless, the quantum computers of today are undoubtedly intriguing. However, whether the quantum pure-play stocks are great buys on the dip remains to be seen. In any case, here are three stocks that may still be worth picking up, regardless of what the quantum timeline ends up looking like.
Alphabet
Alphabet (NASDAQ:GOOG) is the AI and quantum computing innovator behind the Willow chip breakthrough that propelled the quantum stocks higher late last year.
Undoubtedly, Willow showed us all what quantum is capable of, solving a calculation that would have taken classical computers 10 septillion years in just five minutes. That’s computing power that’s nothing short of profound. Arguably, it’s wise to just stick with Alphabet. It’s a diversified innovator that’s wildly profitable, with ample new ambitious growth drivers that could kick in before the decade’s close.
Notably, the autonomous vehicle business Waymo stands out as another potential growth engine that can make GOOG shares prove cheap at these levels. At just 25.9 times trailing price-to-earnings (P/E), those seeking a one-stop-shop of disruptive tech could do very well by sticking with the name.
IBM
IBM (NYSE:IBM) is another blue-chip tech titan that’s also advancing quantum computing by a great deal. If you want a well-ironed-out timeline for quantum, look no further than the company’s quantum roadmap, which is filled with milestones the firm hopes to achieve within the next several years.
Arguably, a lot of the big feats are within the five years. Though, some of the more ambitious ones lie more than eight years out. If IBM can deliver, I think it’s not too far-fetched to think quantum could begin to take off in less than a d
If the company can make good on its quantum supercomputer promises (it hopes to demonstrate quantum-centric supercomputing in 2025), perhaps Huang’s prediction for quantum could prove too conservative. Come 2029, IBM hopes to have a fully error-corrected system, which will allow for the running of large-scale problems to be solved. And if a firm beats IBM to it, perhaps quantum may be closer to reality than Huang thinks.
All considered, I view IBM as a blue-chip innovator to own at just 20.7 times forward P/E.
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