As Bitcoin (BTC-USD) has proven, taking part in the first wave of an emerging sector can yield great benefits. Although the field of quantum computing is still in early stages, it has high disruptive potential to supercharge processing and reduce energy consumption. Quantum computing stocks are betting their bottom lines on these developments.
BCC Research positioned the quantum computing market size at an altcoin-grade level of $713.4 million in 2022. It’s poised to grow up to $6.5 billion by 2028 at a compound annual growth rate (CAGR) of 48.1%. Additionally, governments have taken note as well.
In October 2022, the European High Performance Computing Joint Undertaking (EuroHPC JU) had invested €100 million across sites in six EU nations. Across the pond, the National Science and Technology Council (NTSC) had invested $844 million for FY23 to develop the U.S. quantum sector.
Which quantum computing stocks are pushing the envelope of this exciting new field?
Honeywell International Inc. (HON)
Honeywell International (NASDAQ:HON) spread its innovative solutions and licensing across four divisions. Those include aerospace (commercial and defense), building technologies, performance materials and technologies, and safety and productivity solutions.
In June 2020, the company unveiled it had built the world’s most powerful quantum computer with a quantum volume of 64. Back then, this was twice as powerful as other alternatives. Owing to its proprietary precision control and ultra-high vacuum chamber, Honeywell’s approach yielded the lowest error rates.
Interestingly, Honeywell takes advantage of Microsoft’s (NASDAQ:MSFT) Azure Quantum to scale up its applications in materials and chemistry sciences. In January 2024, the company announced the first successful equity raising of $300 million for Quantinuum.
Led by JPMorgan Chase and valued (pre-money) at $5 billion, Quantinuum follows the merger between Honeywell Quantum Solutions and Cambridge Quantum Computing in November 2021. Year to date (YTD), HON stock is down 6%. Based on 18 analyst insights pulled by Nasdaq, the average HON price target is $228.2 versus current $196 per share.
In the fourth quarter of 2023, Honeywell’s financial performance aligned with market forecasts. Analysts had predicted earnings per share (EPS) of $2.6 and revenue projections of $9.7 billion. The company delivered on these expectations with an EPS of $2.6 and reported revenues reaching $9.44 billion.
Arqit Quantum Inc. (ARQQ)
Unlike Honeywell, Arqit Quantum (NASDAQ:ARQQ) is a stock focused on encryption services. Investors should consider this angle as the main adoption vector for quantum computing stocks. Based in London, ARQQ offers platform-as-a-service (PaaS) to secure communications and documents with the help of a quantum computer.
The actual computing is outsourced to QuantumCloud, so any device can install the software. According to Fortune Business Insights, quantum cryptography market size should grow from $128.9 million in 2023 to $455.3 million by 2030, at 19.8% CAGR.
For FY23, Arqit Quantum Inc. had an operating loss of $84.4 million vs $63.7 million loss year prior, ending up with $44.5 million in cash and cash equivalents, 9% lower than in 2022. For future growth, ARQQ relies on its TradeSecure™ service as fully compliant with the UK’s Electronic Trade Documents Act (ETDA), which allows for commercial trade documents to be digitized with the same legal status.
Further, ARQQ stock is up 60% YTD. This follows the boost from early March reseller agreement with Total Computers for Arqit’s Symmetric Key Agreement Platform and NetworkSecure™ Adaptor.
IonQ, Inc. (IONQ)
Based in Maryland, IonQ Inc. (NASDAQ:IONQ) has pushed the commercialization of quantum computing the farthest. The company not only sells hardware and software but also licensing, training and leasing, in addition to a subscription model.
Having its own quantum computers, Harmony, Aria and Forte, the latter is the company’s latest addition with a 32-qubit system using trapped-ion technology. Like Honeywell, IonQ Inc. uses Microsoft Azure, but supplemented with Dell’s Hybrid Quantum Computing Solution.
In January 2023, IONQ boosted its development portfolio after acquiring Canadian Entangled Networks’ assets. In the latest Q4 2023 earnings, it delivered $22 million in revenue and $65.1 million in bookings, which is a 166% annual growth.
Similar to other quantum computing stocks due to intense initial development, the company delivered a $157.8 million net loss. It ended up with $455.9 million in cash and cash equivalents. Currently, the stock is down 21% YTD. The average IONQ price target twelve months ahead is $16.63 vs current $9.54, based on 6 analyst insights pulled by Nasdaq.
On the date of publication, Shane Neagle 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.
