8 Best Quantum Computing Stocks to Buy for 2022

·5 min read

Analysts love these quantum computing stocks.

Quantum computers are the next leap forward in computing power. Using the power of quantum mechanics to solve certain problems, quantum computers can do things that even the biggest and best classic supercomputers in the world cannot. This nascent technology creates multidimensional spaces to represent very large problems. Quantum computers can even perform certain tasks in about one second that would take a classic supercomputer a week to perform. Given the technology's potential, it's certainly understandable why investors are excited about the future of quantum computing. Here are eight top quantum computing stocks to buy, according to Wall Street analysts.

Microsoft Corp. (ticker: MSFT)

Microsoft Quantum, which the company calls "the world's first full-stack, open cloud quantum computing ecosystem," allows developers to build quantum applications and run them on multiple systems. Quantum computing may be a relatively small part of Microsoft's overall cloud services and software business, but Bank of America analyst Brad Sills says there are plenty of other reasons to love Microsoft as well, including its Office 365 products and its gaming division -- which will be newly beefed up if its proposed acquisition of Activision Blizzard Inc. (ATVI) goes through. Sills says Microsoft's margins should expand even further in coming years. Bank of America has a "buy" rating and a $365 price target for MSFT stock, which closed at $310.20 on Jan. 14.

International Business Machines Corp. (IBM)

IBM introduced its flagship Q System One quantum computer back in 2019. Most of IBM's customers can only access the Q System One by connecting to the company's quantum computation center in Poughkeepsie, New York, via the cloud. IBM is expanding its quantum footprint, however, and unveiled new quantum computers in Japan and Germany in mid-2021. Bank of America analyst Wamsi Mohan says IBM can generate earnings upside if it improves its execution and the stock is a great defensive investment given IBM's strong balance sheet and recurring revenue. Bank of America has a "buy" rating and a $162 price target for IBM stock, which closed at $134.21 on Jan 14.

Nvidia Corp. (NVDA)

Nvidia provides the processing power driving a wide range of cutting-edge technological innovation, including quantum computing. Nvidia has partnered with Google Quantum AI, IBM and other quantum computing leaders who use Nvidia's cuQuantum software development kit to accelerate their quantum computing work. CFRA Research analyst Angelo Zino anticipates that strong growth will continue in Nvidia's data center and gaming businesses and says the company has a sizable opportunity in the virtual world, including the metaverse. CFRA projects about 15% revenue growth in both fiscal 2023 and fiscal 2024. CFRA has a "buy" rating and a $350 price target for NVDA stock, which closed at $269.42 on Jan. 14.

Alphabet Inc. (GOOG, GOOGL)

Google parent Alphabet built a quantum processor called Bristlecone back in 2018. In 2021, Alphabet opened a new quantum computing research and development lab and data center, and it plans to have a commercial quantum computing system available by 2029. Alphabet is reportedly planning to spin off its quantum computing unit, Sandbox, which may allow investors to make a pure-play investment in Google quantum computing at some point in the future. Zino says Alphabet's stock has a very attractive valuation relative to other Big Tech stocks. CFRA has a "strong-buy" rating and a $3,400 price target for GOOGL stock, which closed at $2,789.61 on Jan. 14.

Honeywell International Inc. (HON)

In November, Honeywell merged its Honeywell Quantum Solutions with Cambridge Quantum, creating a large new quantum computing company called Quantinuum. The new company expects to go public by the end of 2022, though it has yet to make an announcement. In the meantime, investors can still get exposure to the company through Honeywell, which owns a 54% stake in Quantinuum. JPMorgan analyst Stephen Tusa says Honeywell is one of his top growth stock picks for 2022, and warehouse automation, building efficiency upgrades and aerospace spending are all tail winds for the company in 2022 and beyond. JPMorgan has an "overweight" rating and a $275 price target for HON stock, which closed at $217.65 on Jan. 14.

Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)

Taiwan Semiconductor Manufacturing has partnered with Taiwan's Ministry of Science and Technology to create a cloud computing platform and keep the company competitive in the nascent quantum computing market. Morningstar analyst Phelix Lee says Taiwan Semiconductor shares are attractively valued. The company's medium-term revenue growth guidance and aggressive spending budget suggest Taiwan Semi will extend its technological lead into high-growth fields like high-performance computing, autonomous vehicles and 5G networks. Lee says TSM's product pipeline is extremely diversified, which helps protect investors from semiconductor market downturns. Morningstar has a "buy" rating and a $179 fair value estimate for TSM stock, which closed at $140.66 on Jan. 14.

Alibaba Group Holding Ltd. (BABA)

In 2018, Alibaba Cloud and the Chinese Academy of Sciences launched a superconducting quantum computing cloud. Alibaba shares have taken a beating in the past year as the company has navigated intense regulatory pressures from the Chinese government and new rigorous accounting standards from the U.S. Securities and Exchange Commission. Bank of America analyst Eddie Leung says Alibaba is investing for the long term, including in initiatives such as quantum computing, artificial intelligence, robotics and virtual reality. Bank of America has a "buy" rating and a $209 price target for BABA stock, which closed at $131.57 on Jan. 14.

Amazon.com Inc. (AMZN)

Amazon Braket is Amazon's quantum computing service, which includes the Amazon Quantum Solutions Lab. In October 2021, Amazon opened the Amazon Web Services Center for Quantum Computing to research quantum computing technology and tackle the challenges of quantum computing scalability, such as building cryogenic cooling systems. Quantum computing is a small part of Amazon's business, but that could change in the future. Morningstar analyst Dan Romanoff says AWS Cloud, advertising and subscription revenue will be the three primary growth drivers for Amazon over the next decade. Morningstar has a "buy" rating and a $4,100 fair value estimate for AMZN stock, which closed at $3,242.76 on Jan. 14.

The 8 best quantum computing stocks to buy:

-- Microsoft Corp. (MSFT)

-- International Business Machines Corp. (IBM)

-- Nvidia Corp. (NVDA)

-- Alphabet Inc. (GOOG, GOOGL)

-- Honeywell International Inc. (HON)

-- Taiwan Semiconductor Manufacturing Co. Ltd. (TSM)

-- Alibaba Group Holding Ltd. (BABA)

-- Amazon.com Inc. (AMZN)

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