Nvidia’s software will bridge the gap between traditional and quantum computing.
Taiwan Semiconductor chips will be used in both applications.
ASML machines help chip foundries manufacture cutting-edge chips.
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Like investing in artificial intelligence (AI), quantum computing offers investors a wide range of options. There are pure quantum computing plays that offer investors huge rewards in exchange for risk. Other cloud computing players will benefit from the increase in workloads running on their clouds due to access to quantum computers.
And there is another branch of companies that will provide some of the components necessary to make quantum computing a reality. That last group is also heavily involved in the AI arms race and is an intriguing group to consider.
These are some backdoor quantum computing plays that not all investors are thinking about and that are worth considering buying right now.
Image source: Getty Images.
NVIDIA(NASDAQ: NVDA) and its graphics processing units (GPUs) have created most of the AI computing power we know today. There is still a huge amount of computing power to be developed, which will create a massive network that quantum computing will eventually have to interface with. While quantum computing can deliver impressive results on its own, the real value comes from integrating quantum computing with traditional computing in a hybrid approach.
This will require some specialized software to communicate with quantum computers, which Nvidia has already developed. One of the main reasons Nvidia has been the dominant company in the AI arms race to date is its CUDA software, which allows developers to control GPUs to split workloads and have them perform specific tasks. Nvidia has already adopted this software to interface with quantum computers and released CUDA-Q.
This software ensures that Nvidia hardware will be needed to close the gap between quantum and traditional computing, making Nvidia a benefactor of the quantum computing arms race, regardless of which company develops a winning solution. Plus, Nvidia is already winning the AI computing hardware arms race, making it an already successful business.
This makes Nvidia stock a great buy in both the quantum and AI investing space, and this stock has plenty of room to run if both trends continue.
Both quantum computing and AI are impossible without specialized high-tech chips. There is one chip foundry in the world that stands out from the rest for its leading technology and impressive performances, and that is Semiconductor manufacturing in Taiwan(NYSE: TSM). It is the largest chip foundry by revenue and has established itself as a technology leader in this space.
An investment in TSMC is a bet that we will need more advanced chips in greater quantities, and with the rise of AI and quantum computing technology, it stands to benefit no matter which company wins the AI or quantum computing arms race.
This stock is a lower-risk way to take advantage of both investment trends; However, it is much cheaper than many of its peers and can be bought for 31 times forward earnings.
Taiwan Semiconductor is a great way to capitalize on both the AI and quantum computing arms race, as it will be a winner in almost every scenario (as long as companies continue to spend on computing power).
Lastly, there are ASML Holding (NASDAQ: ASML). ASML manufactures highly specialized machines involved in the chip production process for which only it has the technology. This gives ASML a technological monopoly, which is quite rare. Considering how many more chips are expected to be needed thanks to artificial intelligence and quantum computing, ASML will need to sell many more machines to chipmakers like TSMC to meet demand.
In the last 12 months, it has generated around 32.2 billion euros ($37.4 billion) in revenue. Still, that figure could rise to between 44 billion and 60 billion euros ($51.1 billion and $69.7 billion) by 2030 as demand for chips increases, according to management projections.
ASML is another great way to get in on this hybrid AI and quantum computing arms race, and the stock has plenty of room to run if it can hit its financial goals.
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Keithen Drury holds positions at ASML, Nvidia and Taiwan Semiconductor Manufacturing. The Motley Fool ranks and recommends ASML, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool has a disclosure policy.
3 Stealth Quantum AI Stocks to Buy Now was originally published by The Motley Fool
