The next big game-changing technology could be the ticket to explosive gains for your portfolio over time. And that technology may be quantum computing, a type of computing that aims to solve today’s impossible problems. Scientists have been at work in this field for years, but recent developments have spurred optimism that we could be getting closer and closer to the technology’s actual use in the real world.
What’s the difference between the classical computing we use today and quantum? Classical computers use bits as zeros and ones to store data, while quantum computers’ qubits can be weighted as a zero, a one, or both. As a result, they can process data differently than a classical computer — and scale up to answer questions in minutes that would have taken one of today’s computers thousands of years.
So, if this technology reaches the finish line, companies that make, sell, or use quantum tools could see revenue roar higher. If you’re interested in investing in this exciting field and are committed to sticking with it over the long term, here are two stocks that make great buys right now.
Image source: Getty Images.
1. Alphabet
Alphabet (GOOG 0.76%) (GOOGL 0.79%) generates billions of dollars annually thanks to its dominance in the search market — you’re probably more than familiar with its Google Search — and its rapidly growing cloud computing business. The Google platforms bring in most of the revenue as advertisers spend their dollars here to reach their target audience — you and me.
Google services revenue in the recent quarter climbed 10%, topping $84 billion. As for Google Cloud, it sells a wide variety of products and services to customers, and revenue has been increasing in the double digits. In the quarter, it soared 30% to $12 billion.
So, if you invest in Alphabet, you’re getting a well-established tech business that should continue to deliver revenue growth. And on top of this, you can gain exposure to quantum computing since Alphabet is investing in this area — and recently announced key progress.
Alphabet’s Willow quantum chip became the first to solve a major problem for the industry: errors. Willow, while scaling up with more and more qubits, showed that it can reduce errors. The chip also recently proved its strength by solving in about five minutes a computation that would have taken a supercomputer 10 septillion years — that’s 1 with 24 zeros after it. Alphabet has high hopes for Willow, saying it may be the generation of chips that can take on real world problems.
Today, Alphabet is trading for only 18 times forward earnings estimates, down from nearly 25 a few months ago — and that’s a bargain considering Alphabet’s established businesses and its potential to win in the quantum market.
2. Microsoft
Microsoft (MSFT 1.07%) is another company that needs no introduction. The software giant, with a market value of more than $2.9 trillion, is the world’s second-biggest company after smartphone powerhouse Apple. It’s delivered a long track record of earnings growth, and gains in return on invested capital show it’s invested wisely over the years.
MSFT Net Income (Annual) data by YCharts
The company’s biggest revenue drivers are its software products, through the Productivity and Business Processes business, and cloud offerings through the Intelligent Cloud segment. In the most recent quarter, for example, they generated $29 billion and $25 billion in revenue, respectively. And the company’s overall revenue and net income both increased in the double digits year over year.
So, like Alphabet, Microsoft offers investors a solid business that’s proven itself and is a longtime leader in its field. And at the same time, if you buy Microsoft shares, you’re also gaining the opportunity to benefit from quantum computing growth.
Microsoft recently introduced its quantum chip Majorana 1, an innovation it says could make useful quantum computers a reality in a matter of years instead of decades. On top of this, Microsoft has launched a new “quantum ready” program to help businesses better build and invest in this space. The company says 2025 is the year to start getting ready for what’s ahead.
Today, Microsoft shares are trading for 29 times forward earnings estimates, down from more than 36 last year, and this offers investors looking for a safe but exciting way to invest in quantum computing a fantastic entry point.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adria Cimino has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Apple, and Microsoft. 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.
