The quantum computing industry is still in its relatively early stages, which means many companies in this space could be trading at attractive valuations compared to their long-term growth potential. This provides opportunities for the most undervalued quantum computing stocks to buy in April.
One reason for undervaluation is the high degree of uncertainty surrounding the timeline for widespread commercialization and adoption of quantum computing. Some big brands, such as Microsoft (NASDAQ:MSFT) and IBM (NYSE:IBM), might not be considered undervalued given that they are blue-chips in their own right. Investors should explore more speculative names for the best bargains.
Additionally, many prominent quantum computing players are still pre-revenue or in the early stages of generating meaningful sales. Traditional valuation metrics like price-to-earnings may not yet be applicable, leaving investors to rely more on future growth projections, which can be difficult to assess accurately.
However, the most undervalued quantum computing stocks to buy in April could be long term winners. Here are three companies to consider.
IonQ (IONQ)
IonQ (NYSE:IONQ) focuses exclusively on quantum computing, offering quantum computing systems across major public cloud services. With a market cap of around 1.9 billion, it’s also small enough to ride the ups and downs of the market while still being robust enough to withstand volatility. It also means there could be plenty of upside, which may make it undervalued.
For 2024, IONQ has set its revenue expectations between $37 million and $41 million, with bookings projected to range from $70 million to $90 million. However, the company anticipates an adjusted EBITDA loss of approximately $110.5 million. Its EBITDA loss helps make it undervalued. In the long term, its prospects are attractive.
In terms of valuation, it trades at a forward price-to-sales multiple of 47 times sales. Still, this is relatively low compared to analysts’ long-term revenue growth rate, which is another hint of trading below its intrinsic value.
Rigetti Computing (RGTI)
Rigetti Computing (NASDAQ:RGTI) specializes in developing quantum integrated circuits and a cloud platform for quantum algorithms.
RGTI could be one of the most undervalued quantum computing stocks on this list, as its market cap is just 219 million at the time of writing, so there’s substantial room for it to head higher. Its forward P/E ratio of 13 times sales underlines this undervalued nature.
Financially, there’s also some evidence that RGTI could be undervalued, and the company’s best is yet to come.
In the fourth quarter of 2023, RGTI reported revenues of $3.4 million, a decrease from $6.1 million in 2022. The gross margin stood at 75%, slightly declining from 87% in the fourth quarter of 2022. The net loss for Q4 2023 improved to $12.6 million, or $0.09 per share, from a net loss of $22.9 million, or $0.19 per share.
Amazon (AMZN)
Amazon (NASDAQ:AMZN), with its AWS Braket service, provides a platform for experimenting with quantum computing. I think that AMZN could be one of the most undervalued FAANG stocks and one of the most underappreciated quantum players in the quantum computing industry.
AWS Braket is designed to speed up scientific research and software development for quantum computing. It particularly stands out with the launch of IonQ Aria, the first Quantum Processing Unit (QPU) on Braket to feature built-in error mitigation techniques.
On the financial front, Amazon demonstrated robust performance in the fourth quarter, reporting record operating profits of $13.2 billion, a substantial increase from the previous year’s $2.7 billion. Amazon’s revenue also surged by 14% year-over-year to $169.9 billion.
With many developers already familiar with the tools provided by AWS and its related certifications, it gives it a significant leg up over its competitors, thus making it a strong contender for the top spot in the quantum computing industry.
On the date of publication, Matthew Farley did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
