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Have you ever wished you could go back in time and invest in trailblazing companies like Apple (NASDAQ:AAPL), Amazon (NASDAQ:AMZN), or Tesla (NASDAQ:TSLA) before they hit it big? Well, you may just have that chance again today with quantum computing stocks.

The futuristic field of quantum computing has faced some bumps on its road to mainstream adoption lately. The recent Nasdaq correction has hit many once-hot quantum computing stocks hard. But this correction also presents a golden buying opportunity for investors who take the long view.

Quantum computing may sound like science fiction, but its likely to become a commercial reality sooner than you think. Leading experts predict quantum computers will reach the tipping point of usefulness within this decade. When that happens, early investors could be richly rewarded.

The problem is, quantum computing technology is highly complex and many companies trading in this space have business models that are speculative. Were in the early innings of this technological revolution, so plenty of quantum stocks carry substantial risk.

However, the long-term growth prospects in quantum computing are too great to ignore. Quantum computing could drive massive progress in fields like AI, materials science, cryptography, and more. It could fundamentally reshape our digital infrastructure and lead to innovations we cant even imagine yet.

Scooping up promising quantum computing stocks now, while theyre under pressure and trading at a discount, could put you firmly on the path to long-term wealth creation. Lets dive in!

Source: josefkubes / Shutterstock.com

Of all the quantum computing stocks, Honeywell (NASDAQ:HON) strikes me as one of the safer yet potentially lucrative options for investors. Naturally, the quantum computing market is highly-volatile and speculative at this early stage. However, Honeywell has stood out from the pack thanks to its ties to the defense and aerospace industries. The company has been a prime beneficiary of higher defense spending in cutting-edge areas like aerospace and intelligence. With geopolitical tensions rising, Honeywells government business seems poised for further growth.

That said, Honeywell also has an intriguing pure-play quantum computing segment called Honeywell Quantum. Since its formation in 2021, Honeywell Quantum has quickly become a quantum computing leader. It recently became the first company to integrate quantum-computing-hardened encryption keys into smart meters for gas, water and electric utilities

While HON stock has sagged recently amid a broader market downturn (and a revenue miss in its latest quarter), I view this as a buying opportunity. At 20-times forward earnings, Honeywell seems attractively-priced, given its leading positions in must-have aerospace and defense technologies. The company generates mountains of recurring revenue and cash flow to support future R&D and growth initiatives like quantum computing. The company aims to launch a powerful quantum computer called Model H1 in 2023.

For a relatively low-risk play on the quantum computing revolution, Honeywell fits the bill nicely. The company offers stability from its government-contracted businesses, while also providing upside from emerging technologies like quantum computing.

Source: Shutterstock

If you desire a pure-play quantum computing stock, look no further than IONQ (NYSE:IONQ). Since going public, IONQ has emerged as one of the frontrunners in the quantum computing race. While very speculative, IONQ offers tantalizing growth potential.

IONQ has pioneered the use of trapped ions to construct quantum computers. This approach aims to minimize error rates and heating effects compared to rival technologies. The company uses ytterbium atoms suspended in electromagnetic fields for its qubits. Thus far, the results look highly promising.

Earlier this year, IONQ unveiled its next-generation quantum computer called Forte. With a planned 32 algorithmic qubits, it would be the worlds most powerful trapped ion-based quantum computer on the market. Previously, IONQs systems were only accessible via the cloud. However, Forte will also be available as an on-premise solution for select partners. This quarter, IONQ achieved a major milestone by reaching quantum volume 29.

Lets put the good news on the sidelines for now. There are a lot of caveats with this company, but my biggest problem with IONQ is unprofitability. Currently, its balance sheet held over $509 million in cash against $44 million in losses in the most recent quarter. Profitability remains years away, as product development costs weigh heavily on its bottom line.

Another big caveat for me is the stocks massive volatility. Unless you are okay with that sort of risk and are willing to hold for years, I would recommend you avoid pure plays like these and focus more on the two other stocks in this list.

Source: JHVEPhoto / Shutterstock.com

Back to the established giants on this list, IBM (NYSE:IBM) looks ideally positioned to capitalize on the commercialization of quantum computing. Indeed, if any company can make quantum computing mainstream, IBM seems like the top contender.

While much less speculative than pure plays, IBM still offers substantial upside potential, in my view. The company operates the IBM Quantum Network, which allows customers to access IBMs advanced quantum computing systems. Over 210 Fortune 500 companies leverage this network for research and education. As quantum computing grows more practical, IBMs massive customer base gives it an enormous head start over rivals.

Additionally, IBM continues pushing the boundaries on quantum computing performance. Last year, it unveiled its new Osprey processor, which has a quantum volume of 128, double its previous system. IBM aims to launch a 1,121-qubit quantum computer this year, more than doubling its power again. Indeed, IBM may very well become the first to develop quantum computers powerful enough for mainstream business and scientific use.

Besides its growth upside, IBM also offers safety. At just 16-times earnings, IBM is cheap compared to other large tech firms. It generates prodigious free cash flow to support both growing the quantum business and rewarding shareholders.

On the date of publication, Omor Ibne Ehsan did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.comPublishing Guidelines.

Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn.

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3 Quantum Computing Stocks To Make You The Millionaire Next Door - InvestorPlace

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Third Quarter Results of $6.1 Million in Revenue, Above High End of Range

2023 Full Year Revenue and Bookings Outlooks Increased Again

Third Quarter Bookings of $26.3 Million Bring Bookings to $58.4 Million Year-to-Date as of Q3

Announces $25.5 Million Quantum Networking System Sale to AFRL

Robust Commercial Pipeline Growth and Visibility

Achieves $100 Million in Cumulative Bookings Within First Three Years of Commercialization Efforts

Technical Momentum Continues Towards Commercial Advantage

COLLEGE PARK, Md., November 08, 2023--(BUSINESS WIRE)--IonQ (NYSE: IONQ), a leader in the quantum computing industry, today announced financial results for the quarter ended September 30, 2023.

"Our third quarter represents another massive step in a pivotal year for IonQ as we usher in the enterprise era of quantum computing. I am pleased to report we have achieved our goal of $100 million in cumulative bookings within the first three years of commercialization, since 2021, and are on track to exceed that goal by the end of 2023. IonQs commercial pipeline is bigger and better than ever and our technical momentum, while always arduous, continues to be ahead of schedule," said Peter Chapman, President and CEO of IonQ.

"This quarter, we saw further validation of our technology with another two systems sold in a $25.5 million deal from the US Air Force Research Lab (AFRL) to further explore quantum networking. We also unveiled our next two future generations of quantum computers: IonQ Forte Enterprise and IonQ Tempo. IonQ Forte Enterprise will bring #AQ 35 to customers in a form factor that integrates seamlessly into existing data centers. IonQ Tempo will deliver #AQ 64 and quantum advantage for certain applications."

Third Quarter 2023 Financial Highlights

IonQ recognized revenue of $6.1 million for the third quarter, which is above the high end of the previously provided range, and represents 122% growth compared to $2.8 million in the prior year period.

IonQ achieved $26.3 million in new bookings for the third quarter, and $58.4 million year-to-date as of September 30, 2023.

IonQ achieved its previously stated goal of $100 million in cumulative bookings within the first three years of its commercialization efforts, starting in 2021, a full quarter ahead of the initial prediction.

Cash, cash equivalents and investments were $485.1 million as of September 30, 2023.

Net loss was $44.8 million and Adjusted EBITDA loss was $22.4 million for the third quarter.* Exclusions from Adjusted EBITDA include a non-cash loss of $7.6 million related to the change in the fair value of IonQs warrant liabilities.

Story continues

*Adjusted EBITDA is a non-GAAP financial measure defined under "Non-GAAP Financial Measures," and is reconciled to net loss, its closest comparable GAAP measure, at the end of this release.

Commercial Highlights

Technical Highlights

IonQ announced at its September Analyst Day that it now believes it will be able to reach #AQ 64 and commercial advantage using error mitigationthe same technique the company is already employing todayrather than needing to implement full error correction. Error mitigation requires fewer qubits than error correction, and makes IonQ even more confident in the companys ability to reach #AQ 64 in the near-term.

IonQ achieved #AQ 29 on Next Generation Barium Qubits to Deliver Industry Leading Performance, marking a key milestone in the companys journey towards developing scalable and reliable systems capable of commercial quantum advantage.

IonQ intends to achieve an #AQ 64 system by the end of 2025. The company believes that in reaching this #AQ milestone, its systems will deliver quantum advantage for certain use cases and classical computers will no longer be able to fully simulate an IonQ system.

2023 Financial Outlook

For the full year 2023, IonQ is increasing its revenue outlook range to $21.2 million to $22.0 million.

For the fourth quarter of 2023, IonQ is expecting revenue of between $5.3 million and $6.1 million.

For the full year 2023, IonQ is increasing its bookings expectation range to between $60.0 million to $63.0 million.

Announcing Filing of S-3 Shelf Registration Statement

Tomorrow, the company intends to file a universal shelf registration statement on Form S-3 with the Securities and Exchange Commission (the "SEC").*

The company has no foreseeable needs to raise and use additional capital at this time, however would like to maintain the optionality to raise additional capital to fund strategic growth and M&A opportunities in the near to medium term.

*Any offer, solicitation or sale of any of the securities registered under the registration statement will be made only by means of the prospectus and the accompanying prospectus supplement once the registration statement is declared effective by the SEC. This announcement does not constitute an offer to sell or a solicitation of an offer to buy securities, nor may there be any sale of IonQs common stock or other securities in any state or jurisdiction in which such an offer, solicitation or sale would be unlawful prior to the effectiveness of the registration statement with the SEC and registration or qualification under the securities law of any state or jurisdiction.

Third Quarter 2023 Conference Call

IonQ will host a conference call today at 4:30 p.m. Eastern time to review the Companys financial results for the third quarter ended September 30, 2023 and to provide a business update. The call will be accessible by telephone at 877-300-8521 (domestic) or 412-317-6026 (international). The call will also be available live via webcast on the Companys website here, or directly here. A telephone replay of the conference call will be available approximately two hours after its conclusion at 844-512-2921 (domestic) or 412-317-6671 (international) with access code 10183201 and will be available until 11:59 p.m. Eastern time, November 22, 2023. An archive of the webcast will also be available here shortly after the call and will remain available for one year.

Non-GAAP Financial Measures

To supplement IonQs condensed consolidated financial statements presented in accordance with GAAP, IonQ uses non-GAAP measures of certain components of financial performance. Adjusted EBITDA is a financial measure that is not required by or presented in accordance with GAAP. Management believes that this measure provides investors an additional meaningful method to evaluate certain aspects of the Companys results period over period. Adjusted EBITDA is defined as net loss before interest income, net, interest expense, income tax expense, depreciation and amortization expense, stock-based compensation, change in fair value of assumed warrant liabilities, and other non-recurring non-operating income and expenses. IonQ uses Adjusted EBITDA to measure the operating performance of its business, excluding specifically identified items that it does not believe directly reflect its core operations and may not be indicative of recurring operations. The presentation of non-GAAP financial measures is not meant to be considered in isolation or as a substitute for the financial results prepared in accordance with GAAP, and IonQs non-GAAP measures may be different from non-GAAP measures used by other companies. For IonQs investors to be better able to compare the Companys current results with those of previous periods, IonQ shows a reconciliation of GAAP to non-GAAP financial measures at the end of this release.

About IonQ

IonQ, Inc. is a leader in quantum computing, with a proven track record of innovation and deployment. IonQs current generation quantum computer, IonQ Forte, is the latest in a line of cutting-edge systems, boasting an industry-leading 29 algorithmic qubits. Along with record performance, IonQ has defined what it believes is the best path forward to scale.

IonQ is the only company with its quantum systems available through the cloud on Amazon Braket, Microsoft Azure, and Google Cloud, as well as through direct API access. To learn more, visit http://www.ionq.com.

IonQ Forward-Looking Statements

This press release contains certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Some of the forward-looking statements can be identified by the use of forward-looking words. Statements that are not historical in nature, including the words "anticipate," "expect," "suggests," "plan," "believe," "intend," "estimates," "targets," "projects," "should," "could," "would," "may," "will," "forecast" and other similar expressions are intended to identify forward-looking statements. These statements include those related to the companys technology driving commercial advantage in the future, the companys future financial and operating performance, including our outlook and guidance, the ability for third parties to implement IonQs offerings to increase their quantum computing capabilities, the effect of increased availability of customer support functions, IonQs quantum computing capabilities and plans, access to IonQs quantum computers, increases in algorithmic qubit achievement, and the scalability and reliability of IonQs quantum computing offerings. Forward-looking statements are predictions, projections and other statements about future events that are based on current expectations and assumptions and, as a result, are subject to risks and uncertainties. Many factors could cause actual future events to differ materially from the forward-looking statements in this press release, including but not limited to: changes in the competitive industries in which IonQ operates, including development of competing technologies; changes in laws and regulations affecting IonQs business; IonQs ability to implement its business plans, forecasts and other expectations, identify and realize partnerships and opportunities, and to engage new and existing customers, and risks associated with U.S. government sales, including provisions that allow the government to unilaterally terminate or modify contracts for convenience and the uncertain scope and impact of a possible U.S. government shutdown or operation under a continuing resolution. You should carefully consider the foregoing factors and the other risks and uncertainties disclosed in the Companys filings, including but not limited to those described in the "Risk Factors" section of IonQs most recent Quarterly Report on Form 10-Q and other documents filed by IonQ from time to time with the Securities and Exchange Commission. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. Forward-looking statements speak only as of the date they are made. Readers are cautioned not to put undue reliance on forward-looking statements, and IonQ assumes no obligation and does not intend to update or revise these forward-looking statements, whether as a result of new information, future events, or otherwise. IonQ does not give any assurance that it will achieve its expectations.

IonQ, Inc.

Condensed Consolidated Statements of Operations

(unaudited)

(in thousands, except share and per share data)

Three Months EndedSeptember 30,

Nine Months EndedSeptember 30,

2023

2022

2023

2022

Revenue

$

6,136

$

2,763

$

15,936

$

7,324

Costs and expenses:

Cost of revenue (excluding depreciation and amortization)

2,008

733

4,945

2,043

Research and development

24,599

13,292

60,701

30,282

Sales and marketing

5,047

1,969

11,289

5,971

General and administrative

13,927

10,149

35,438

26,901

Depreciation and amortization

2,749

1,531

6,869

4,248

Total operating costs and expenses

48,330

27,674

119,242

69,445

Loss from operations

(42,194

)

(24,911

)

(103,306

)

(62,121

)

Change in fair value of warrant liabilities

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Quantum computing is poised to be one of the most important technologies of the 21st century. With global governments having collectively pledged more than $38 billion in public funds for quantum technologies and $2.1 billion of new private capital flowing to quantum companies in 2022, quantum technologies, particularly quantum computers, are rapidly moving from the lab to the commercial marketplace.

By leveraging the principles of quantum mechanics, quantum computers have the potential to perform certain computations exponentially faster than classical computers. From drug discovery and modeling chemical reactions to optimization problems and emissions reduction, quantum computers are poised to revolutionize various industries and accelerate global scientific progress.

In addition to these use cases, quantum computing is particularly important to the cybersecurity community. Thats because a future quantum computer of sufficient size and efficiency could crack current encryption schemes and jeopardize all information and communications currently protected by such schemes (public-key encryption enables more than 4.5 billion internet users to securely access 200 million websites and engage in $3 trillion of retail ecommerce each year).

On the opposite side of that coin, certain quantum technologies can strengthen existing encryption and power an estimated $30 billion quantum cybersecurity market by the end of the decade.

Quantum technologies are, therefore both a sword and a shield for cybersecurity. Thus, organizations and governments must invest in quantum offensively and defensively to adequately protect our data from the threat that quantum computers pose to current encryption schemes and take advantage of extremely strong cybersecurity solutions over the long term.

Todays public key cryptography that secures much of our communications and data relies upon math problems that are extraordinarily difficult for classical computers to solve. But a quantum computer running a dedicated algorithm (such as Shors algorithm) will likely be able to extract the encryption key and decrypt the underlying data in a reasonable time interval. Thus, any system using public-key encryption will be vulnerable to an attack by a quantum computer.

The timeline for developing a cryptographically relevant quantum computer is highly contested, with estimates often ranging between 5 and 15 years. Although the date when such a quantum computer exists remains in the future, this does not mean this is a problem for future CIOs and IT professionals. The threat is live today due to the threat of harvest now, decrypt later attacks, whereby an adversary stores encrypted communications and data gleaned through classical cyberattacks and waits until a cryptographically relevant quantum computer is available to decrypt the information. To further highlight this threat, the encrypted data could be decrypted long before a cryptographically relevant quantum computer is available if the data is secured via weak encryption keys.

While some data clearly loses its value in the short term, social security numbers, health and financial data, national security information, and intellectual property retain value for decades and the decryption of such data on a large scale could be catastrophic for governments and companies alike.

To address this threat, the National Institute of Standards and Technology (NIST) has been working since 2016 to identify and select a set of cryptographic algorithms that are theoretically resistant to attacks from quantum computers and classical computers. NIST released draft standards for the first three algorithms in August 2023 and is currently accepting comments until November 22, 2023, before finalizing the standards in 2024.

We have seen significant action from the Legislative and Executive branches of the US government to push the public sector to migrate to post-quantum cryptography (PQC) algorithms as soon as they are standardized.

In May of 2022, President Biden released a national security memorandum (NSM-10) outlining efforts to protect US government assets from the quantum threat. NSM-10 states that the goal for the US federal government is to move the maximum number of systems off quantum-vulnerable cryptography within a decade of the publication of the initial set of standards.

In December of 2022, President Biden signed the Quantum Computing Cybersecurity Preparedness Act requiring federal agencies to migrate information technology systems to post-quantum cryptography. This will be impactful for government agencies as well as companies that do business with the federal government, especially those providing IT services.

Both government actions seek to align the federal government to the NIST PQC algorithms with a goal of completing as much of the migration as possible by 2035.

This is an aggressive timeline. Historically, major cryptographic transitions can take years and even decades to complete. Starting the migration process now gives organizations the chance to put in place protections before cryptographically relevant quantum computers become available. The PQC migration is likely to be a long and resource-intensive exercise and will require cryptographic agility to shift IT systems to the final standards, provide flexibility among the algorithms, and protect data with minimal disruption.

Although NISTs algorithms are not yet standardized and we likely remain years away from a cryptographically relevant quantum computer, the time is now to:

1) Begin inventorying cryptography systems that will be vulnerable to future quantum attacks2) Develop Quantum IQ across your organization by exploring the benefits and risks that quantum technologies will pose for your business3) Review the NIST post-quantum algorithms and create a strategy for cryptographic agility that will allow you to shift your systems to the final standards and protect your data with minimal disruption; and4) Identify partners established in the quantum ecosystem who can guide you through the transition to quantum-resilient cybersecurity while protecting data from both classical and quantum cyberattacks.

At Quantum World Congress James Kushmerick, director of the Physical Measurement Laboratory at NIST, stated the sooner we get this out, the better off well be whenever a cryptographically relevant quantum computer is developed. This will be a long process and government agencies and the private sector must begin the hard work of inventorying data and putting together a plan for PQC migration and cryptographic agility now to adequately prepare for the threat.

Cryptographic agility is particularly important given that one of the then-leading PQC candidates, Rainbow, was broken in 2022 by a laptop. While migrating to PQC algorithms is extremely important (and will likely be required for government agencies and their private sector contractors), these algorithms are still based on math problems and there is a chance that they may be cracked in the future, requiring new algorithms to be integrated. The ability to implement seamless updates will be important for organizations to maintain trust and ensure the integrity of cryptography, against threats both classical and quantum.

Additionally, cryptographic agility will provide organizations the freedom to assess and test quantum-leveraged cybersecurity solutions such as quantum-hardened keys and quantum key distribution (QKD) as part of an all of the above approach to cybersecurity in the quantum age.

As discussed above, PQC is a necessary start for cybersecurity in the quantum age. However, it is not a panacea to the threat posed by quantum computers.

Given the scale of the threat that future quantum computers are likely to pose to encryption, a defense in depth approach will be necessary. This layered approach will deploy PQC algorithms alongside tools that leverage quantum mechanics to offer stronger security guarantees. Such technologies include quantum computing-hardened and non-deterministic processes for encryption key generation and QKD.

Encryption keys are the basis of all cryptography and classical and PQC algorithms both rely on properly secured keys. One of the benefits of quantum is that it is fundamentally unpredictable and applying the power of quantum computers to harden encryption key generation can protect sensitive encrypted data and communications against current and emerging threats.

Furthermore, these provably unpredictable keys can maximize the resilience and lifetime value of existing critical technology infrastructures. Such quantum-computing-hardened keys are available today and offer a stronger alternative for key generation.

Rather than relying on math problems, QKD relies upon quantum mechanics to protect communications. With QKD it is possible to exchange a key and prove that it has not been intercepted by anyone as the attempt to measure the communication by a potential eavesdropper alters the quantum state. This guarantee will last forever, meaning that once a key is exchanged, it is safe, even if encryption algorithms are broken. Importantly, QKD protects against classical attacks such as man-in-the-middle attacks as well as attacks from a future cryptographically relevant quantum computer.

QKD is a complex technology that requires a significant amount of hardware and infrastructure to adequately generate the quantum states that make it valuable for the future of our cybersecurity. Researchers and industry are working to overcome these challenges and further commercialize and deploy QKD in the field, but its range and commercial implementation remains somewhat limited.

The National Security Agency (NSA) has issued guidance which did not recommend QKD technologies for securing the transmission of data in national security systems today. However, as the technology continues to advance, QKD has the potential to offer the next generation of cybersecurity and provide a uniquely quantum method for securing communications that will stand to greatly benefit military and civilian networks alike. When combined with PQC algorithms, these quantum-derived technologies can provide a layered approach to cybersecurity that further protects data and communications.

By considering how quantum-hardened encryption keys and QKD can fit into their quantum readiness strategy alongside PQC, organizations will be better prepared for that unknown day in the future when a cryptographically relevant quantum computer becomes available. These technologies are complementary rather than opposed to one another and are all critical pieces of the cybersecurity puzzle in the quantum age.

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Security in the impending age of quantum computers - Help Net Security

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