Quantum computing could transform many industries — including pharmaceutical discovery, materials science, artificial intelligence (AI), and cybersecurity — as the technology becomes more efficient. Some experts believe quantum computing will be the next big technological wave, which is why startups like IonQ are getting a lot of attention from investors right now.
The company’s quantum computers use trapped ions to perform computations, which could potentially offer more accurate and scalable solutions than other quantum hardware. But many estimates still put the real-world benefits of quantum computing years down the road.
As such, I think it’s better for most investors to focus their attention on artificial intelligence opportunities right now, which still have many more years of potential growth. Here are two companies that will likely be better investments than IonQ stock in the coming years.
Image source: Getty Images.
1. Taiwan Semiconductor
Taiwan Semiconductor (TSM +1.54%) is the manufacturing workhorse behind nearly all of the world’s most advanced semiconductors, including those for AI data centers. If you look under the hood of nearly any artificial intelligence server, the processors manufactured in it are likely made by Taiwan Semiconductor, also called TSMC.
The company has spent decades developing the most advanced semiconductor manufacturing plants, essentially leaving rivals like Samsung and Intel in the dust. Making advanced chips is no easy feat, and having the equipment to do so takes billions of dollars in investments, which has given TSMC an early lead that’s propelled it to about 90% of the advanced processor market.
Fortunately, sales and earnings have followed. In the company’s most recent third quarter results, revenue rose by 30% to $33.1 billion, and earnings increased 39% to $2.92 per American depositary receipt (ADR). TSMC’s CEO, C.C. Wei, highlighted the company’s confidence in its AI opportunity on the Q3 earnings call, saying, “We are still very comfortable that the demand for leading edge semiconductor is real.”
To top it all off, TSMC’s stock is relatively well-priced compared to many of its AI peers. The company’s shares have a price-to-earnings ratio of 31.5, which is nearly on par with the average P/E ratio of 31 for the S&P 500 index and far lower than the tech sector’s 47 average.
Taiwan Semiconductor Manufacturing
Today’s Change
(1.54%) $4.49
Current Price
$295.22
Key Data Points
Market Cap
$1530B
Day’s Range
$294.48 – $297.90
52wk Range
$134.25 – $311.37
Volume
479K
Avg Vol
12M
Gross Margin
58.06%
Dividend Yield
0.01%
2. Broadcom
Broadcom (AVGO +2.91%) is a leading designer of application-specific integrated circuits (ASICs) that are used in artificial intelligence and cloud computing systems, and it has become a leading choice for some AI companies’ needs.
For example, ChatGPT creator OpenAI announced recently that it is partnering with Broadcom for 10 gigawatts’ worth of AI accelerators by 2029. Broadcom will work with OpenAI to codevelop AI accelerators, and Broadcom will deploy AI server racks and networking systems.
The result could be billions of dollars in sales for the company, per WSJ, and it comes at a time when Broadcom’s AI revenue is already booming. Management estimates that its artificial intelligence revenue will be $90 billion annually by 2027 — a 650% increase from 2024.
Today’s Change
(2.91%) $10.02
Current Price
$354.31
Key Data Points
Market Cap
$1672B
Day’s Range
$350.88 – $358.30
52wk Range
$138.10 – $374.23
Volume
730K
Avg Vol
23M
Gross Margin
63.13%
Dividend Yield
0.01%
AI is the better long-term play
IonQ’s bet on quantum computing could eventually pay off, but right now it’s a pretty big gamble. The company had just $21 million in sales in the recent quarter, compared to its $178 million net loss. With most real-world applications of quantum computing still years down the road, investors are essentially placing a bet that IonQ will benefit from quantum computing before the industry has even taken shape.
Instead, investors are likely better off putting their money toward two leading artificial intelligence companies — Taiwan Semiconductor and Broadcom — that are already growing sales and earnings significantly and have a foothold in the AI market. While no investment outcome is guaranteed, these two companies are already established leaders and should continue benefiting from their early AI moves for years to come.