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Quantum computing stocks popped Tuesday, Jan. 21 in response to President Donald Trump’s newly announced Stargate program. The joint venture between Oracle (ORCL), SoftBank (SFTBY), and OpenAI is intended to invest $500 billion into artificial intelligence (AI) infrastructure in the U.S.
For investors, it is also a comforting sign that Trump’s administration is cozying up to Big Tech. Sam Altman, Larry Ellison, and Masayoshi Son all directly commented on Stargate, acknowledging that the joint venture had already been in the works prior to Trump’s inauguration. Ellison, the co-founder of Oracle, said that 10 buildings were currently under construction in Texas. Wall Street seems to think this cooperation bodes well for quantum computing names. With this in mind, “Strong Buy”-rated Nvidia (NVDA) and Alphabet (GOOGL) are worthy buys here.
Quantum Computing Stock #1: Nvidia
Santa Clara-based Nvidia (NVDA) almost needs no introduction. With a market capitalization above $3.4 trillion, the company has dominated most discussion of artificial intelligence thanks to its high-power graphics processing units (GPUs). The company also says it is investing heavily in quantum computing research.
Nvidia had a runaway year in 2024, and its shares are up nearly 150% over the past 52 weeks. Shares are up just under 10% for the year to date.
Shares now trade at a premium valuation. Nvidia’s forward price-earnings ratio is 49.62x, above the sector average of 30x. Its price-sales ratio of 26.12x also is far higher than the average of 3.31x. Critics take issue with its lofty multiples, but bulls point to its continued potential and AI dominance as proof it can still grow into its valuation.
Nvidia reported its third-quarter results for its fiscal 2025 on Nov. 20, and its quarterly revenue of $35.1 billion set a new record for the company, up 94% year-over-year. Data center revenue of $30.8 billion was up 112% year-over-year. Nvidia’s adjusted earnings per share also soared, coming in at $0.81, up 103% from the prior-year period. The company handily beat estimates for both the top and bottom lines.
Unsurprisingly, Nvidia commands a consensus “Strong Buy” rating. Its average price target of $176.90 represents 20% of upside from its current price, and its Street-high target of $220 represents nearly 50% upside potential.
Quantum Computing Stock #2: Alphabet
Investors can thank Mountain View-based Alphabet (GOOGL) for jumpstarting the most recent quantum computing rally. The company unveiled its Willow quantum computing chip in December and captivated Wall Street with its promise of completing advanced mathematical problems in mere minutes. Alphabet is most known for its Search and Cloud offerings, but it also works in more cutting-edge fields like self-driving cars, quantum computing, and research to increase human lifespans. Alphabet’s market cap is currently at $2.4 trillion.
Alphabet’s shares are up nearly 36% over the past 52 weeks, and just under 5% in the year to date.
Shares are elevated compared to the industry average, but not to the same extent as Nvidia. Google’s forward P/E ratio of 24.5x is just above the average of 20x, although its P/S of 6.8x dwarfs the average of 1.35x. Once again, investors view a bet on Google as a bet on continued outperformance.
Revenue for its third quarter came in at $88.3 billion, up 15%. This was largely driven by a 35% year-over-year increase in its Google Cloud revenue to $11.4 billion and a 13% increase in Google Services revenue to $76.5 billion. Earnings per share were up 37% to $2.12.
Alphabet also commands a “Strong Buy” rating with 50 analysts in coverage. Its average price target of $215.86 implies 9% upside, while its Street-high price target $240 suggests that GOOGL stock could gain 20% from here.
