Looking at quantum computing stocks for August 2023, the playing field has changed a bit. Some of the pureplay top quantum computing picks, such as IonQ (NYSE:IONQ) have seen their share prices skyrocket in recent months. That makes it harder to find undervalued quantum computing stocks.
Some investors believe that the market has used up all of its gains for this year. This indeed might be the case, considering how far and how quickly these stocks grew in value.
The good news, though, is that there are quite a few reasonably priced companies that have a quantum computing arm within their broader operations. That makes it possible to get access to the quantum upside without paying too much via these three quantum stocks to buy now.
Alphabet (GOOGL)
Search giant Alphabet (NASDAQ:GOOGL) needs little introduction. What may be less known, however, is the wide array of other businesses operating within Alphabet’s umbrella.
One of these, its quantum computing division, turned into a separate company, Sandbox AQ, in 2022. Earlier this year, it raised $500 million as it developed various lines of business. These include cybersecurity, quantum software modeling for drug development, and quantum sensing technology that could one day supplant the Global Positioning System.
Keep in mind that Sandbox’s potential success should benefit other Alphabet businesses. Increases in computing and storage demand related to quantum computing, for example, should drive a big uptick in the use of the Google Cloud Platform. There are natural synergies to the artificial intelligence division as well.
Quantum computing alone won’t make or break the thesis for GOOGL stock in 2023. But it could play an increasingly important role in coming years as quantum advances and puts a wide range of new applications into reach.
Honeywell (HON)
Honeywell (NYSE:HON) probably isn’t the first company that springs to mind when thinking of cutting-edge technology companies. Usually, Honeywell is more associated with established industries such as medical devices and aerospace equipment.
However, as it relates to quantum computing, Honeywell has already made a big splash. In partnership with Cambridge Quantum, Honeywell has formed Quantinuum, which is an integrated quantum computing firm. It uses the trapped ion approach to create high-quality qubits, and this approach appears to be one of the leaders in the field today.
With quantum computing stocks heating up, Honeywell could look to spin off Quantinuum while retaining a partial ownership position while also unlocking some of the upside potential in its novel technological arm. As HON stock trades at a modest 20 times forward earnings, this allows investors to own a quality industrial firm at a reasonable price while getting a built-in call option on quantum as well.
IBM (IBM)
The computing giant IBM (NYSE:IBM) has had something of a rough transition to the modern technology landscape. Big Blue missed many of the leading tech trends of the past twenty years, and as such, has struggled to grow revenues much in recent years.
However, IBM’s reputation for expensive high-performance hardware could come in handy again. This time, though, it’s not lumbering mainframe machines, but rather quantum computers.
IBM has utilized superconductor-based quantum technologies to deploy what it describes as the world’s largest quantum fleet. The company believes that it is at the cusp of being able to deploy quantum at scale via its Qiskit Runtime quantum solutions offering.
The possibilities are particularly interesting in that IBM has the chops and R&D budget to seek to cross-pollinate its quantum capabilities with the IBM Watson artificial intelligence platform. And, IBM’s cloud computing business has gotten a big leg up since the firm’s acquisition of Red Hat.
Putting the pieces together, IBM could be building a leading next-gen computing platform. Meanwhile, investors haven’t woken up to the new IBM stock; shares still go for just 15 times forward earnings and offer a 4.6% dividend yield.
On the date of publication, Ian Bezek held a long position in IBM stock. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
