When artificial intelligence (AI) emerged as the next big thing a couple of years ago, much of the talking points around the technology revolved around how it would be deployed in corporate environments to enhance productivity, data analytics, and efficiency. While AI certainly lends a hand to these applications, it is capable of far more.
Some of the more subtle use cases for AI include process improvements in drug discovery, financial fraud, and cybersecurity. But to achieve major breakthroughs in these areas, today’s AI protocols are going to need some enhancements.
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This is where quantum computing comes into play. While quantum computing is not a widely adopted component of AI right now, the opportunity it presents is enormous.
Let’s explore the quantum computing market and assess which companies are making waves in the space. More importantly, after a thorough analysis of the industry’s hottest players, I’ll reveal my top disruptor in the quantum computing arena and make the case for why investors should consider buying this stock hand over fist right now.
Image source: Getty Images.
1. Quantum computing is a massive opportunity
Management consulting firm McKinsey & Company estimates that the total addressable market (TAM) for quantum computing could be as much as $131 billion by 2040. Under the broader quantum computing umbrella, McKinsey sees mobility, life sciences, chemicals, and financial services as four of the biggest opportunities — set to potentially gain $1.3 trillion in value by the middle of the next decade thanks to quantum computing adoption.
2. This AI stock is an underrated opportunity in quantum computing
Interest in quantum computing started to emerge in the later months of 2024. During that period, relatively unknown names, such as IonQ, D-Wave Quantum, Quantum Computing, and Rigetti Computing, began witnessing abnormal buying activity. These dynamics are not uncommon. Oftentimes, when a new trend begins to gain steam, smaller players start to see some momentum — usually driven by speculation or hype narratives.
IONQ data by YCharts.
As the chart above shows, each quantum computing stock I mentioned above is trading well off its prior highs. While this might suggest these once-red-hot stocks are good buys right now, let’s check out their valuations.
IONQ PS Ratio data by YCharts. PS Ratio = price-to-sales ratio.
Despite their precipitous sell-offs, each of the stocks in this peer set still trades for extended valuations. The magnitude of these price-to-sales (P/S) multiples underscores that IonQ, Rigetti Computing, Quantum Computing, and D-Wave Quantum aren’t generating much in terms of revenue — yet each company is trading at a valuation near or more than $1 billion.
On top of that, none of these companies is on a proven path to generate consistent profitability. Given these valuation dynamics, none of the quantum computing stocks in this cohort are trading at levels that would suggest buying the dip.
Beyond the smaller players, several “Magnificent Seven” stocks, including Amazon, Alphabet, and Microsoft, are quietly competing in the quantum computing arena as well. While each of these companies has made impressive inroads into quantum computing, my top pick in the space right now is Nvidia (NASDAQ: NVDA).
At the moment, Nvidia is best known for its AI chips, called graphics processing units (GPUs). However, few investors understand that Nvidia also has a software product called CUDA that works in parallel with the GPUs. By tightly integrating both its hardware products with an in-house software service, Nvidia is quickly building an end-to-end platform for enterprise AI infrastructure.
Nvidia is parlaying this strategy by adding another stitch to the broader CUDA fabric. Known as CUDA-Q, Nvidia now has a software suite that can work alongside the hardware stack needed to perform sophisticated tasks in quantum computing. Just as Nvidia has become the market leader in the AI chip space, I think the company is going to emerge as a force in the quantum computing industry despite receiving little coverage in the space so far.
3. Nvidia stock is trading for a bargain
Similar to the other stocks mentioned in this piece, shares of Nvidia are also trading well off their highs. As of this writing (May 7), Nvidia stock has plummeted 24% off its 12-month high — losing nearly $1 trillion in market cap in the process.
But unlike IonQ, Rigetti, D-Wave Quantum, and Quantum Computing, Nvidia stock trades at a reasonable valuation. As seen below, the compression in the company’s forward price to earnings (P/E) multiple could suggest that expectations around Nvidia have either normalized or that growth investors could be souring on the stock.
NVDA PE Ratio (Forward) data by YCharts. PE Ratio = price-to-earnings ratio.
Despite some near-term uncertainty as it pertains to the ongoing tariff situation and Nvidia’s prospects in China, I would not write off the company. For now, Nvidia remains in control of the AI chip market, and as explored above, quantum computing represents a longer-term opportunity worth tens of billions of dollars for the company.
I think investors with a long-term horizon should consider taking advantage of Nvidia’s current depressed price action and buy the stock hand over fist.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
