Quantum computing’s real-world impact could be years — or decades — away.
Pure-play quantum stock valuations currently look extremely inflated.
Alphabet is positioned to lead in this area, and the downside for the tech titan is limited.
10 stocks we like better than Alphabet ›
Quantum computing has captured investor imagination with its potential to solve problems that would take classical computers millennia to crack–from designing new materials to breaking encryption codes. But the gap between laboratory breakthroughs and commercial applications is vast.
Pure-play quantum stocks like IonQ and D-Wave Quantum have soared on expectations of near-term commercialization, but there’s plenty of reason to believe investors are getting ahead of themselves.
Image source: Getty Images.
That could be a big problem for quantum start-ups; it won’t be for Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). The company took the long view on quantum computing when others were still skeptical. Beginning in the early 2010s, the company committed substantial resources to building a world-class quantum research operation, investing not just money but years of development time. That, in my opinion, is the sort of approach most likely to win out here.
Unlike its smaller competitors, Alphabet has the resources to continue to pursue research and development of useful quantum technology, no matter how long it takes. If it doesn’t pay off in the coming years, it won’t have much of an impact on Alphabet — not so for the likes of D-Wave and Rigetti. For these companies, the risk is existential. If and when quantum computers truly take off, Alphabet will be at the forefront, whether through its own efforts or through strategic acquisitions.
Before you buy stock in Alphabet, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Alphabet wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you’d have $648,924!* Or when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $1,102,333!*
Now, it’s worth noting Stock Advisor’s total average return is 1,055% — a market-crushing outperformance compared to 190% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisor, and join an investing community built by individual investors for individual investors.