so if you had bought $5,000 in Nvidia 10 years ago it would be worth around $230,000 today but while we've seen a historic rise in that and other AI stocks if investors only focus on the already big AI stocks you could miss the bigger opportunities that are just getting started in a new tech area Quantum Computing stocks so I found three Quantum Computing stocks that are small enough to still have room to grow while actually showing some pretty solid reasons behind why they could double or triple in price while AI stocks like Nvidia take the
spotlight as we go I'll also talk about how each stock covers one of the three biggest product areas of quantum Computing because when it comes to picking great stocks it's important that we understand a company's products and not just their numbers massive growth happens when a company has the perfect product in a quickly growing Market before that market appears like Nvidia which is why I'll also be sharing my 5 years of experience advising Fortune 500 companies on emerging Technologies including Quantum to give my opinion of each company's products and not just their stock price so
our first stock works right at the bottom of the quantum stack designing the physical quantum computers that are driving this whole Market this is important to investors because one of the big reasons nvidia's stock price has risen so rapidly is because their gpus have become the backbone of AI training and data processing but as we push the limits of what classical Computing can handle the next Frontier is quantum Computing a market expected to grow at a staggering 32% compounded per year and potentially reaching $170 billion by 2024 so ion Q is a small under the
radar company that I recently bought shares in that is quietly leading the market in building quantum computers using their precise trapped ion technology and this company is working to unlock billions of dollars by building a new type of quantum computer so we can think of a classical computer as being made up of a bunch of Lego blocks representing bits each block or bit is like a switch a one or a zero the basic building blocks of a computer but quantum computers introduce a new magical Lego block called a cubit which can be a one a
zero or both at the same time this new type of block is really useful for solving certain kinds of problems they can run simulations billions trillions or even septi of times faster than classical computers and so problems that we consider impossible today suddenly become possible with a powerful enough quantum computer this will revolutionize Pharmaceuticals with protein folding solve huge problems in logistics and shipping and give their owner the ability to hack any computer on Earth in an instant companies should start investing in Quantum Computing now Quantum Computing has the potential to revolutionize Logistics the encryption
that shielding Bitcoin could be compromised by a quantum computer could hack into Financial transactions Medical records but wait wa wait wait wait we're getting ahead of ourselves it's easy to get excited about the potential of quantum computers but as investors we need to look at where the value is getting created so there are two big problems that companies are racing to solve in the quantum space and the company that solves them stands to become the leader in what will one day be a trillion dollar industry so those two problems are precision and scaling so let's
start with Precision since that's where ion Q stands out the most quantum computers are in incredibly sensitive at tiny scales things move really unpredictably making control a big problem it's like trying to stack Lego blocks on a trampoline there's just so much bouncing that it's hard to keep things together for long you can partly fix this by just cooling the computers down to super cold temperatures to make them more stable kind of like damping how much the trampoline bounces but as you make the computers more and more powerful kind of like building a bigger and
bigger Lego tower on the trampoline the more likely something is to break so how can we make computers precise enough to do math and solve big complicated problems with all this Randomness happening well ion Q has taken a unique approach by using trapped ion Q bits which are more stable and reliable than the competition they built a system that uses atoms locked in place with systems of lasers to control them kind of like super gluing your pieces of Legos together on your trampoline that makes their quantum computers much better at solving tricky problems without introducing
errors especially in industry like healthcare defense and finance which is why they're getting so much interest in those areas but these trapped ion cubits also help them with the second problem in Quantum scalability so I've worked as an engineer for a while and I have seen so many prototypes that claim they're about to change the world most never do and that's because it's easy to solve a problem on paper but it's way harder when a product has to stand up to real world situations so with quantum computers it's not enough to have a couple cubits
that can do some tricks you need to have a path to scale to a theoretically infinite number of cubits kind of like how classical computers grew into a multi- trillion dollar industry and ion Q's design actually sets them up pretty well for this their trapped ion technology is designed to scale from one cubit up to hundreds by locking each new atom into a chain in a straight line they've so far shown that this can work up to 79 cubits but the stability of this platform should be able to handle a lot more and as they
scale up the size of these lines which they call chains since they don't use physical wires they can communicate between cubits much faster than traditional computers and this scaling of their systems seems to be on track with the company announcing a huge technical milestone in early 2024 when they achiev 35 algorithmic cubits a year ahead of schedule these algorithmic cubits measure not just the physical number of atoms but how they can be combined in a real world computer so you hear all this about quantum computers but sometimes it can be hard to tell what do
all these technical achievements really mean so with early Tech like this ultimately I think one thing matters are people willing to give them money for the technology today so ionq is still what I would call a research and development company they do have some Revenue which has actually doubled in the past year but they aren't yet profitable and they are burning through cash as they develop their latest ion Q Fort computer but unlike a lot of small Quantum companies ionq does have a real product that we can actually test right now they begun partnering with
the major Cloud providers to begin allowing developers to try out their systems building their own tools on top of well-known software development kits to make it easier for programmers to get started so I actually tested it out and I thought it was pretty cool how you could basically program stuff today that can run on an ion Q system now the stock is very volatile it's worth less than10 billion and it's up over 250% in the past year so it is a more risky stock but I felt comfortable enough to take a small position in the
company but sometimes the biggest money in a new industry isn't made by the most public companies so over the past 5 years while every small tech company has slapped AI onto their name there's been a whole class of companies that sat back and quietly made a fortune building the hardware for testing and Manufacturing the chips driving the AI boom and they're gearing up to play a similar role in Quantum so as you're studying a new industry like Quantum it's important to pick the best research tools to help you out which is where this video sponsor
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and Manufacturing the chips of the future so if quantum computers are like the engines of the future terraine is is the mechanic that ensures everything runs smoothly pterodon doesn't build quantum computers themselves they make the testing and automation systems that ensure Quantum Hardware like processors and chips work reliably and can scale to meet growing demand and they do this in two key ways testing and automation so imagine you're designing the world's most advanced Orchestra where every musician needs to play in Perfect Harmony well Quantum processors are kind of like the musicians they need to work
together with Incredible Precision to create something incredible but if even one musician is Out Of Tune it ruins the entire performance and that's where pterodon comes in you can think of pterodon as the conductor with the sharpest ears testing every single musician before the concert begins their job is to make sure that every part of the processor is Flawless there's no misn notes and there's no mistakes so that the final product performs perfectly only with pteridine the testing is all automatic this Market of automated test equipment is A10 billion perear Market but it's expected to
more than double in size by 2032 and it's not this huge pool of companies kodine is one of the two biggest companies in the space along with advantest but Quantum processors aren't quite the same as traditional ones that might be used for AI for example and they come with some unique challenges for one still a developing technology where a lot of companies are still experimenting with what shapes and sizes end up working best and they are also far more sensitive to noise and defects pterodon specializes in testing processors with the extreme level of precision needed
for Quantum chips something that not every semiconductor tester can do and that's what makes me really excited about pteridine is they have this ability to tune all kinds of these Quantum orchestras so that whichever type of processor ultimately ends up winning there's a good chance that pterodon business will [Music] benefit but testing Quantum processors is only one piece of the puzzle to keep up with the growing demand for quantum computers factories need to be able to assemble chips faster and in much larger quantities one way to fix this robots pteridine develops robotic systems to automate
production lines speeding up the process to make chips while maintaining quality now experts think the quantum Computing Market could 10x in size over the next decade growing by 30% per year to reach $18 billion by 2030 so the work of building all these chips will likely Fall to whichever companies already have the equipment and the expertise in place to start making those chips quickly the stock price is relatively flat over the past few years and the stock trades at a fairly reasonable valuation for their industry so it might not take too much to lift this
Stock's price over the next 5 to 10 years now I'll address the comments now that this isn't technically a Quantum stock I mean they don't hype themselves up with AI or Quantum or really any other specific use case pteridine instead is just laser focused on providing the best products that they can for their customers but I'm betting that Quantum will become a long-term boost for this company and the stock is included in the Defiance Quantum ETF which is a basket of stocks for investing in Quantum Technologies but as important as building the computers is software
is what will ultimately make them run so this next stock is Bridging the Gap between the raw power of quantum computers and the Practical solutions that businesses need so this Stock's exciting because they operate at the highest level across three very different areas of quantum and even though this is technically a private company I'll show you how you can still get in on this gamechanging stock so starting with software Quan continuum's claim to fame is developing the tcat tool set this is like a toolbox that software developers can use to program on quantum computers without
needing to be experts in quantum mechanics so fair warning I struggled to come up with a great analogy here but software devs let me know how this one went in the comments so if a quantum computer is like an off-road car designed to explore difficult areas quantum's teat software is like the steering wheel that lets you control what the car is doing it takes incredibly difficult Quantum problems that humans can code like optimizing Global Supply chains or simulating molecules and Maps out the most efficient path for quantum computers to solve them now they aren't the
only company working on toolkits like this IBM has their own that I talked about in my last video but what's unique about quum approach is they're trying to make their teat software completely Hardware agnostic it works with quantum computers from companies like IBM ionq or retti they make it so that you can take their steering wheel and use it with any car regardless of the maker model which is super useful since you're not locked in using only one Quantum company's computers with your code quum has also recently launched their lambc toolkit which lets you interact
with quantum computers via natural language like telling chat GPT what you want the computer to do and Kermit which is a software system for Quantum error mitigation which we talked about before is a key problem to making quantum computers more useful this company is really pushing out a lot of quantum software tools which is why over 500,000 developers have downloaded tat so far and while it doesn't have the same reach as IBM's tools yet that is still pretty impressive for a small company that doesn't own their own cloud platform like the big hyperscalers do but
even more important than the software is how quintum fits into the overall ecosystem as a whole so while many companies in the quantum space are racing to grab market share with their own Hardware they just focus on their open-source Quantum toolkits and then tat works with everything ranging from IBM superconducting cubits to ion Q's trapped ion technology but even more importantly they are also actively collaborating with every industry leader that they can they've partnered with infinion Technologies to develop better parts for quantum computers called ion traps they've worked with Microsoft for for decreasing error rates
on logical cubits heck IBM went further and they just invested directly in quintum because they are technically a private company and they don't have the same pressure to beat the competition and make profits in the short term and because of this because quintum is not tied to any single technology for building quantum computers superconducting cubits traion technology they get to skip the riskiest part of the still developing market so whichever technology wins out quum just gets to grow with their Partners at the overall rate of the quantum Market which is a growth rate that I
would be very happy with but the biggest reason that I like quenum isn't the software they're making or even the benefits they're bringing to the ecosystem it's the super unique position the company has to take advantage of new improvements in the quantum space so quum was originally created by merging Honeywell Quantum Solutions with a company called Cambridge Quantum ultimately forming the world's largest Standalone Quantum company and one that has a ton of cash the company has since received backing from some pretty Heavy Hitters including JP Morgan Chase mitsu and Amgen but the most important investor
to outside investors was last year when Honeywell poured an additional $300 million into the company giving it a 5 billion doll valuation at the time and that is more than recent Quantum High Flyers d-wave retti and ion Q combined at the time now this also means that Honeywell now owns the majority of the company around 54% and it means Quint can benefit from honeywell's Deep expertise in high Precision Industrial Equipment their super Deep Pockets for investing into research and development in Quantum and maybe most usefully honey Well's existing relationships and trusts with all the big
Industries they are one of the biggest players in Aerospace energy Healthcare and Logistics all of which are industries that quanum would love to enter and those existing contracts could provide a huge advantage to quanum and their Partners as the technology matures now since Continuum isn't a public company we can't invest in the stock directly but we can estimate its value based on comparable public companies which would put its value around $20 billion today so considering Honeywell owns 54% of the company and honeywell's value is just under $150 that means quantina makes up around 75% of
honeywell's value so if we buy Honeywell stock we get 7.5% exposure to quanum as well now this obviously isn't a pure Quantum play like ion for example but considering Honeywell is rated as one of the cheapest stocks in the industrial space any big breakthroughs from quanum could result in a significant price rise for honey well as well without exposing investors to the same risk as investing directly in a smaller Quantum stuff but fun fact one of the biggest use cases for Quantum is actually going to be creating even better AI models so check out this
video for the top four AI stocks that are better than Nvidia
