Since March 2022, the United States Federal Reserve has increased its benchmark interest rate by 525 basis points to the current 5.25% to 5.50% range. Additionally, revised 2017 GDP data showed the economy sustained an average annual growth rate of 2.2% from 2017 to 2022, up from the previously estimated 2.1%. The revisions also indicated a stronger economic performance from the income perspective, as Americans saved more during the COVID-19 pandemic to readjust corporate profits on an upward trend. In turn, these developments bode well for the overall economic health and the growth of the stock market. Plus, an increase in consumer confidence and spending bodes well and will fuel demand for cutting-edge technologies in quantum computing sure to revolutionize industries. These three quantum computing stocks are doing just that, and investors should buy in for long-term returns.
IonQ (IONQ)
IonQ (NYSE:IONQ) specializes in developing quantum computing hardware and software for generating and executing quantum circuits. WSJ analysts have given IonQ three Buy ratings and forecasted a median price target of $17.00, ranging from a high and low of $21.00 to $14.00, respectively. IONQ stock is up over 300% year-to-date (YTD), currently priced at $14.29 per share.
The market for quantum computing technology is projected to grow at a CAGR of 32.1%, from $928.8 million in 2023 to $6.5 billion in 2030. In response to the growing demand for cloud computing and AI, IonQ is poised to completely enter these markets by 2023.
The company has reported solid Q2 financials, with a revenue of $5.5 million for Q2 representing a 111% year-over-year (YoY) increase. The company is increasing its revenue outlook from $18.9 million to $19.3 million and raised booking expectations range between $49 million to $56 million, almost doubling the prior year’s forecast.
Despite being at the start-up stage, IonQ is the first to offer its computing systems on all the major public clouds. The immense growth since its inception is fueled by its partnerships with tech giants like Microsoft (NASDAQ:MSFT), Amazon Web Services, and Google Cloud. One of the main investors of the company is the Japanese telecommunication company, SoftBank Group (OTCMKTS:SFTBY). This partnership is crucial due to the plethora of tech enterprises in SoftBank Group, and its aim to bring IonQ’s most powerful computer, Aria, to these companies.
IonQ is well-positioned for success with its strong partnerships and financials, and they are poised to become a major player in the industry.
Analog Devices (ADI)
Analog Devices (NASDAQ:ADI) is a global leader in manufacturing analog, mixed-signal and digital signal processing integrated circuits used in electronics.
ADI is up 6.34% YTD. The global semiconductor market is projected to grow from $573.44 billion in 2022 to $1,380.79 billion by 2029, boasting a CAGR of 12.2%. Analog Devices reported a PYQ3 revenue of $3.08 billion, down 1.07% YoY.
In July, Analog Devices invested over $1 billion to expand its semiconductor wafer fabrication facility in Beaverton, Oregon. The facility is the largest one of its kind, serving customers in critical industries such as automotive and healthcare. This funding will go towards expanding the cleanroom space of the facility and providing more efficient and environmentally friendly new state-of-the-art fabrication tools. The investment will almost double the number of products running through the facility and will provide more job opportunities.
Additionally, in June, Analog Devices announced the Apollo MxFE Advanced Software-Defined Signal Processing Solution. That announcement shared the next-generation applications of various technologies such as electronic surveillance, test and measurement, phased array radar and 6G communications in Aerospace and Defense. The growth of these applications with further assist in developing more efficient communication standards with wider bandwidths and more rapid processing for services like 5G, 6G, Wi-Fi 7, Wi-Fi 8 and radar.
Yahoo Finance reported that 16 of 26 analysts gave the stock a Buy or Strong Buy rating. The consensus average 1-year price target was $200.48, ranging from $175.00 to $220.00.
Growth in the company’s manufacturing and the announcement of crucial technology for developing communication standards signifies great future growth in the company.
Honeywell International (HON)
Honeywell International (NASDAQ:HON) is an American-based industrial and technological firm with a focus on quantum computing. Honeywell aims to contribute technologically to a variety of industries. The company’s stock grew 3.53% YoY and could increase further this fiscal year.
The quantum computing sector in 2022 was valued at $717.3 million globally and was projected to grow 29.5% to $928.8 million in 2023. Looking long term, the industry could reach $6.5 billion in revenue by 2030, landing overall at an extremely bright CAGR of 32.1%.
Financially, Honeywell was strong in its most recent quarter, beating YoY figures in every category. The company showed $9.1 billion in revenue, growing 2% YoY. Plus, EPS reached $2.22, increasing by 21% from Q2 2022. Finally, the company’s free cash flow was $1.1 billion, boosted by strong net income and working capital.
The largest factor in favor of HON has been the recent spin-off division merger with Cambridge Quantum-Computing to form Quantinuum. Quantinuum, with Honeywell being the largest shareholder, is a company that creates and develops various generations of quantum computers, now currently on its second-generation model. The new complete focus on quantum computing for Honeywell through Quantinuum, rather than a separate division inside the premier parent company, will prove to be more successful in terms of the development of products, as well as allocation of resources and ultimate revenue.
Overall, the large tailwinds of a new quantum computing company backed by solid financials will only propel HON to further success. Buy now for a stock with great long-term growth.
On the date of publication, Michael Que did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
The researchers contributing to this article did not hold (either directly or indirectly) any positions in the securities mentioned in this article.
