These 2 Artificial Intelligence Stocks Could Be the Best Buys in the Quantum Computing Revolution | The Motley Fool

For the last couple of years, investors have learned how artificial intelligence (AI) is paving the way for a new frontier in the technology sector. At this point, it's common knowledge that AI is used for developing software, building large language models (LLMs), and even training autonomous vehicles.

While these applications are exciting, a new pocket of the AI realm is starting to receive quite a bit of attention. Stocks including Rigetti Computing, D-Wave Quantum, and IonQ have witnessed quite a bit of action over the last few months, as each of these companies claims to be leading the charge in AI's "next big thing" -- quantum computing.

The temptation to follow momentum into little-known opportunities is very real. After all, what if one of these companies becomes the next millionaire-maker AI stock?

Although I understand this line of thinking, I'd encourage potential investors to take a step back and remember that Rigetti, D-Wave, and IonQ were all penny stocks less than a year ago. Instead of buying into a narrative, investors are better off focusing on existing leaders in the AI market and assessing which of those companies may parlay its accomplishments into quantum computing.

Let's explore two companies that I think are poised to make a splash in the quantum computing arena, and assess why each looks like a great buy right now.

1. Alphabet

My hunch is that you're already familiar with Alphabet (GOOG 1.18%) (GOOGL 1.06%) since the company operates two of the most visited websites on the internet -- Google and YouTube.

While Alphabet derives most of its sales through advertising, the company has made investments in AI-powered services to bolster its business model, which now supports workplace productivity tools akin to Microsoft's Office suite, cybersecurity solutions, cloud computing infrastructure, and hardware devices such as mobile phones.

In addition to its existing AI products, Alphabet has also been quietly exploring the area of quantum computing. Back in December, the company revealed that its quantum chip, dubbed Willow, demonstrated reduced error rates and astonishingly fast computational speeds during an experiment. Specifically, Willow's superior processing power solved a problem in five minutes that would otherwise have taken the most sophisticated supercomputers 10 septillion years to crack.

Indeed, this is impressive work from Alphabet. But I think this case study underscores one thing above all else: Quantum computing doesn't have much application today, given where things currently stand in the AI revolution.

Nevertheless, I actually see that dynamic as a benefit for Alphabet. The company already has an established footprint in the AI market, and given Alphabet's hugely profitable business, the company has the financial flexibility to explore and build best-in-class products in emerging areas.

So even if Willow isn't a money-making machine for Alphabet today, the company's accomplishments have me optimistic that quantum computing will at some point become further integrated into Alphabet's existing AI suite, further separating the company from an intense competitive landscape.

2. IBM

International Business Machines (IBM -0.31%) has developed a series of quantum computing processors known as Heron, Condor, Eagle, and Osprey. However, it's the company's software platform that has me most excited.

IBM offers a quantum computing software application called Qiskit. Qiskit is a software suite marketed toward quantum developers. Some of the selling points of the platform are that it helps streamline workflows, assists with code generation, and provides cloud-based infrastructure to run workloads across various devices.

For me, IBM is flying under the radar in both the AI race and specific quantum computing use cases. While many quantum computing companies are still experimenting in theory-based advancements, IBM has a unique opportunity to build end-to-end quantum infrastructure through a combination of its hardware processors and the Qiskit software suite. This could be a major differentiator from other companies developing quantum computing products and one that could help IBM begin to really scale as the AI movement heats up.