The quantum computing arms race is starting to heat up, as multiple companies have announced breakthroughs in this important field. However, we’re still way out from widespread commercially available quantum computing, so it’s difficult to determine which companies are outright winning this race.
Still, that doesn’t mean investors need to ignore this important sector. Instead, investors can use a technique known as basket investing to give themselves the best opportunity to make a profit.
Big tech companies have announced huge breakthroughs over the past few months
What is basket investing? Well, it involves filling a basket’s worth of different stocks. By not going all-in on one particular company, you spread out this risk among multiple investments. This is similar to creating a mini-index fund or ETF within your portfolio specifically designed to capitalize on one investing trend.
This is a great way to play the quantum computing investing trend, as there are multiple promising companies but no clear leaders yet.
Companies like Alphabet (GOOG 1.18%) (GOOGL 1.06%) and Microsoft (MSFT 1.14%) have recently announced breakthroughs with their various quantum computing chips. In December, Alphabet launched its Willow quantum computing chip, which solved a major problem native to quantum computing: Accuracy.
Quantum computing isn’t as precise as traditional computing based on how it transmits information. Traditional computing transmits information in bits, which are either a 0 or a 1. Quantum computing transmits information in qubits, which can be described as a number between 0 and 1. Because there are infinitely more numbers between 0 and 1 (think decimal numbers), qubits can store more information than bits. However, this is inherently inaccurate because it isn’t exactly a 0 or a 1.
The company that completely solves this problem first will take a huge lead in the quantum computing race, and companies are getting closer and closer each day.
Google’s Willow chip made huge progress toward this goal by arranging the qubits in a grid-like system, making it more accurate as the chip scales in size. Microsoft created a new state of matter to better control the particles and give more accurate answers with its Majorana 1 chip.
However, both of these companies are using their own funding to develop these quantum chips and are working on perfecting them before launching them. While this works with the big tech companies that have massive cash flows to fund these developments, it doesn’t work for some of the smaller players.
Quantum computing pure-plays are already partnering with clients
Quantum computing pure-plays, like IonQ (IONQ -1.36%) and D-Wave (QBTS -1.44%), are already partnering with clients to develop their quantum computers. This approach may work out for them in the end, as they will have built relationships and solved real-world applications while the big tech companies are focusing more on theory. However, this focus on commercially viable products could also crush them if all of the development money the big tech firms are spending on their quantum solutions turns out to exceed what these pure plays develop.
Both companies are seeing promising results in solving the accuracy issue and have massive contracts and sales to accompany it.
IonQ landed the largest quantum computing contract of any company in 2024, inking a $54.5 million deal in 2024 and recently expanding that contract value by $21.1 million in 2025 with the U.S. Air Force Research Lab. D-Wave is already selling commercially viable quantum computers, and announced the first sale of its D-Wave Advantage system, which they claim is the world’s largest with 5,000 qubits available.
Both pieces of news are incredibly bullish for both stocks, but it remains to be seen if this near-term lead results in a long-term sustainable advantage. It’s too early to tell, which is why taking a basket approach with these four companies is a great idea.
By buying equal parts of each company, you’ll have exposure to four solid quantum computing picks. However, two of them are much higher risk (D-Wave and IonQ), so investors need to be prepared to potentially lose most of their investment in these two if they lose the race. In the meantime, the investment in Microsoft and Alphabet should stay profitable, as these two tech giants have a lot of growth on the horizon thanks to AI.
I believe a basket approach is the best way to play the quantum computing trend. It provides massive upside while spreading out the risk among multiple companies.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
