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Quantum computing remains industry of high potential and rapid evolution, igniting investor interest with its promise to revolutionize computational speed. The quantum race is heating up after Microsoft (MSFT) introduced its Majorana 1 chip, upending the belief that practical quantum computing is still decades away. This innovative chip, designed to minimize errors and enhance performance, has sparked optimism that quantum technologies will soon transition from theoretical research to real-world applications.
These kinds of swift developments are reflected in the strong performance of established technology giants that have embraced quantum breakthroughs over the past year.
In particular, International Business Machines (IBM) has consistently pushed the boundaries of quantum research, while Intel (INTC) and SAP (SAP) have also integrated quantum innovations into their core operations. As the industry shifts toward practical applications, these three stocks offer a compelling opportunity for investors seeking exposure to the emerging quantum computing revolution. Here’s a closer look at why these stocks could be top picks as the quantum frontier unfolds.
Quantum Computing Stock #1: Intel
California‐based Intel (INTC) has long been a leader in semiconductor technology and a pioneer in quantum computing research. The company is leveraging its deep manufacturing expertise to develop scalable quantum systems that address complex enterprise challenges. Despite its continued dominance in PC and server CPUs, Intel’s market leadership has eroded over time. Intel has a market cap of $101 billion.
After shedding more than 40% in the last year, its stock has rebounded 17% year-to-date.
Currently, Intel trades at a forward price‐earnings ratio of 16.85x, which is 50% below the industry average. Its price-to-sales ratio of 0.81x is also markedly lower compared to the industry average of 3.2x, highlighting attractive valuation metrics amid a competitive market.
In January, the company reported Q4 earnings that beat estimates. Revenue reached $14.26 billion, a 7% decline year-over-year, while EPS of $0.13 marginally exceeded expectations.
During the earnings call, management hinted at a sequential revenue decline in Q1, with the midpoint of its guidance at $12.2 billion. The company is also guiding for breakeven adjusted EPS. This downturn is expected to be more pronounced as customers accelerate purchases ahead of upcoming tariffs.
In other news, reports indicate that Taiwan Semiconductor Manufacturing (TSM) may be interested in buying or partnering on its foundry business, while Broadcom (AVGO) is eyeing its chip design unit. Such potential deals could set the stage for dramatic shifts in Intel’s business model.
Until the company achieves a significant breakthrough that could serve as a major catalyst, analysts maintain a consensus rating of “Hold.” The stock is currently trading near its average price target of $24, while the Street-high target of $60 implies upside potential of over 180%.
Quantum Computing Stock #2: International Business Machines
Valued at $238 billion by market cap, International Business Machines (IBM) is a leading global technology and consulting company specializing in cloud computing, artificial intelligence, and enterprise solutions.
The company’s strategic focus centers around these two rapidly evolving areas. Success in this sector depends on IBM’s ability to innovate and form partnerships with industry leaders to offer robust, comprehensive solutions. Its competitive differentiation lies in its expertise in technology and business processes, augmented by strategic partnerships with Adobe (ADBE), Amazon (AMZN), and Microsoft.
Shares of IBM have delivered a remarkable return over the past year, gaining 34% in value and also rising 13% year to date, showing resilience amid broader market headwinds.
Despite a bull rally, IBM is still trading at a decent valuation. Its forward P/E ratio of 24.4x aligns with the sector median of 23.5x. Its forward P/S ratio also stands at 3.7x, compared to an industry average of 3.07x.
IBM shares skyrocketed 13% after reporting its Q4 results on Jan. 29. The company earned a profit of $3.92 per share, beating the estimate of $3.78, while revenue landed at $17.55 billion, a modest 1.3% increase from last year. This strong revenue is driven by the software segment, which contributed $7.9 billion to total revenue.
IBM’s outlook for 2025 remains upbeat, projecting a minimum 5% rise in annual revenue. The company’s ongoing push to innovate within its software division, driven by surging demand for hybrid cloud and AI solutions, is expected to fuel this growth. With a full-year cash flow forecast of roughly $13.5 billion, IBM clearly signals strong confidence in its continued performance.
Analysts have a consensus “Moderate Buy” rating on IBM stock. The company is trading just below its average price target of $252.33, but its Street-high price of $320 still presents around 30% upside potential.
Quantum Computing Stock #3: SAP
Based in Walldorf, Germany, SAP (SAP) is one of the world’s largest independent software vendors and the leading provider of ERP solutions. The company is expanding its research into quantum computing through collaborations with technology partners and research institutions to develop algorithms for complex enterprise challenges.
SAP is accelerating quantum innovation by joining key consortia as a member of the European Quantum Industry Consortium and the German-based Quantum Technology and Application Consortium. These partnerships are driving breakthroughs in AI, cloud solutions, and business transformation, positioning SAP as a pioneer in next-generation technology.
Valued at a hefty $322.7 billion market cap, shares of this software company are up 47% over the past 52 weeks.
However, this outperformance comes at a cost. The company trades at a lofty valuation of 43.3x forward P/E, significantly above the industry average of 23x and its own historical average of 26x.
In its recent quarterly report, the German company showed strength in its financials. Revenue rose 10% to $9.7 billion, while EPS of $1.49 was well above the consensus estimate of $1.33.
The company also boasts a strong balance sheet, with free cash flow of $6.35 billion and over $11 billion in cash at quarter’s end. These robust cash flows are a testament to SAP’s efficient operations, positioning the firm for future growth.
SAP also received a bullish rating from Wall Street analysts, which is a consensus “Strong Buy,” with a mean price target of $290.56, suggesting about 5.6% upside potential.
