Following the stock market’s record-breaking 2024, during which the S&P 500 index returned a spectacular 23%, there’s optimism among investors for the bull market to deliver further gains in 2025.
Amid a resilient economic backdrop and strong corporate earnings, a major investing theme has been the emergence of artificial intelligence (AI), which has already proven its ability to reshape various industries. Perhaps even more exciting are the recent breakthroughs in quantum computing that have moved this cutting-edge technology from the realm of theoretical research into real-world commercial applications. Innovative companies in these fields are poised to benefit from the significant long-term growth opportunity.
Here are 4 AI stocks to watch in the quantum computing revolution.
Image source: Getty Images.
1. Alphabet
Alphabet (GOOGL 0.82%) is renowned for its dominance in internet advertising, leveraging several market-leading platforms, including Google Search, Chrome, Android, and YouTube.
This diversified ecosystem positions its stock as a potentially compelling investment and serves as a powerful channel to integrate cutting-edge, AI-driven innovations that enhance user experiences and optimize advertising conversion rates. The impact is evident in Google Cloud where its AI and machine learning tools have captured strong demand from customers seeking to integrate AI into their applications and workflows.
Alphabet continues to pioneer new technologies. In 2024, the company announced that its Willow quantum processor achieved “quantum supremacy” in specific tasks, performing highly complex optimization, simulation, and machine learning calculations beyond the capabilities of classical supercomputers.
As AI evolves, quantum computing may be necessary to unlock the full potential of the next generation of breakthroughs with concepts like artificial general intelligence (AGI) on the horizon. With its track record, Alphabet is well positioned to remain at the industry forefront.
2. International Business Machines
Alphabet isn’t the only tech giant diving into AI and quantum computing. International Business Machines (IBM 0.47%) is posting robust growth through its comprehensive approach to AI, which spans infrastructure hardware, hybrid-cloud solutions, and a suite of enterprise software applications. IBM’s Watsonx.ai platform has been pivotal in helping large organizations integrate generative AI and machine learning into their business processes.
This ongoing transformation toward high-value services has been cheered by the market, with IBM’s stock price surging 38% over the past year.
IBM is also investing in quantum computing. Its Condor processor, boasting 1,121 superconducting qubits — measuring the quantum computational power — is among the world’s largest. This aligns with a roadmap aimed at scaling bandwidth over the next decade. IBM also offers the Qiskit open source software development kit, enabling clients to experiment with quantum computing at the circuit level.
The expectation is that the IBM Quantum Network will begin to play a larger role in the overall business going forward.
3. D-Wave Quantum
D-Wave Quantum (QBTS 8.28%) is part of a growing number of companies that can be categorized as a pure play on quantum computing compared to its more diversified megacap counterparts. D-Wave focuses on quantum annealing, an alternative processing method it believes delivers practical, real-world advantages for optimization problems.
With more than 130 commercial, research, and government customers, D-Wave is seeing strong demand from its cloud-based quantum computing as-a-service (QCaaS) offering. As of Sep. 30, revenue had climbed 52% through the first nine months of 2024. This trend has helped shares rise by more than 380% in the past year.
While a lack of profitability adds a layer of risk investors need to balance, D-Wave’s rapid pace of innovation, including the development of the “Advantage2” system supporting upwards of 4,400 qubits, deserves close attention.
4. IonQ
IonQ (IONQ 0.59%) specializes in trapped-ion quantum computing, recognized for its inherently lower error rates, which could be ideal for future AI applications where precision is key. The company’s strategy is to continuously develop more powerful quantum computers, building on its current IonQ Forte and Tempo systems, which are designed to integrate into standard data center infrastructure. Compared to D-Wave Quantum, IonQ has posted even stronger growth, with revenue up 102% in its last reported third quarter (for the period ended Sep. 30). High-profile customers like pharmaceutical leader AstraZeneca, using IonQ’s systems to expedite drug discovery, and Goldman Sachs in banking illustrate the company’s early commercial momentum.
Ultimately, 2025 will be a crucial year for IonQ and other quantum computing leaders to reaffirm their long-term potential.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Goldman Sachs Group, and International Business Machines. The Motley Fool recommends AstraZeneca Plc. The Motley Fool has a disclosure policy.
