Exploring the Dilemma between Quantum Technologies and Conventional AI: Which Equity Investments are Indispensable in 2025?
Quantum computing has recently become a buzzword on Wall Street, with stocks soaring after Alphabet announced that its new quantum chip, Willow, can significantly reduce errors as it scales up. This small-cap tech company achieved a monumental feat by performing a standard benchmark computation in just five minutes, a task that would take one of the world's fastest supercomputers over 10 septillion years.
Following this announcement, stocks like D-Wave Quantum, Quantum Computing, Rigetti Computing, and IonQ saw a significant surge. However, in January, these stocks took a plunge due to the skepticism of high-profile tech CEOs such as Nvidia's Jensen Huang and Meta Platforms' Mark Zuckerberg, who believed that "very useful" quantum computing was 15 to 30 years away.
Defenders of quantum computing and its stocks have risen to the occasion, arguing that this technology has the potential to make a significant impact in the near future. They point out that while companies like Quantum Computing, D-Wave Quantum, and Rigetti Computing have little to no revenue, the potential for significant returns is enormous, as seen in IonQ's market cap of $9 billion and its forward P/S ratio of over 200.
Investors should be aware that while the future of quantum computing is promising, the technology remains an emerging field with high uncertainty. On the other hand, AI stocks like Micron Technology and TSMC, which already demonstrate practical applications and substantial revenue, can be considered safer investments for those seeking established returns.
Micron Technology has seen a surge in demand for its memory chips due to the growth in AI. Its revenue in the fiscal first quarter jumped 84%, and it has a close working relationship with Nvidia, which is believed to be its biggest customer. Another AI stock worth considering is TSMC, the world's largest contract chip manufacturer, which handles production for companies like Nvidia, Apple, and Broadcom. TSMC's revenue growth and market share make it an attractive investment for those who see AI's continued growth.
In conclusion, while quantum computing stocks and companies like IonQ, D-Wave Quantum, and Rigetti Computing are seen as exciting and potentially lucrative, the future of this technology remains uncertain. On the other hand, AI stocks like Micron Technology and TSMC represent safer investments with proven returns and growth potential. Investors seeking high returns should keep both options in mind and weigh the potential risks and rewards before making a decision.
In light of the potential returns, many investors are considering allocating a portion of their finance portfolio to quantum computing stocks like IonQ and D-Wave Quantum. However, it's crucial to remember that investing in this sector comes with its own set of risks, as mentioned by Micron Technology's customer, Nvidia's Jensen Huang, who believes that practical quantum computing applications are still several years away.
