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Quantum computing is making notable strides, positioning itself as a compelling sector for investment. These advancements are expected to drive interest in quantum computing stocks, as the industry progresses from research and development.

For quantum computing stocks, last year was marked by some significant developments. In 2023, public funding for quantum technologies increased by more than 50%, with global investments reaching $42 billion. Private investment in quantum technology startups totaled $1.71 billion, despite a decrease from previous years.

Furthermore, there were 367,000 graduates in quantum technology-relevant fields in 2023, with a 10% increase in universities offering masters degrees in quantum technology.

So quantum computing stocks and the industry as a whole is rapidly making progress toward commercialization. Here are three companies that I feel will be in the best position moving forward to take advantage of these trends and emerge as long-term winners. Dont miss out on these opportunities.

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D-Wave Quantum (NYSE:QBTS) specializes in quantum annealing technology, which is used for optimization problems and has various industrial applications.

Despite its small size (~$200M market cap), D-Wave has established itself as an early leader in commercial quantum computing. The companys Q1 results show strong traction, with revenue up 56% year-over-year to $2.5 million and bookings up 54% to $4.5 million. D-Wave has also been steadily growing its customer base, especially among large enterprises. It currently has 128 total customers, including 25 Forbes Global 2000 companies.

Encouragingly, D-Wave has also been improving its financial profile. Gross margins expanded from 27% to 67% year-over-year in Q1 as revenue grew and operating efficiencies kicked in. Adjusted EBITDA loss narrowed by 24% to $12.9 million. While still unprofitable, D-Waves losses are moving in the right direction.

Analysts are quite bullish on the stock, with a consensus strong buy rating and an average price target of $2.80, representing 150% upside from current levels. The companys modest ~$200M enterprise value leaves ample room for appreciation if D-Wave can execute on its growth initiatives and maintain its early leadership among quantum computing stocks.

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IonQ (NYSE: IONQ) focuses on trapped ion quantum computers, offering systems across major public cloud services. I think its definitely one of the quantum computing stocks for investors to consider.

IonQ delivered strong Q1 results, with revenue of $7.6 million coming in above the high end of guidance and representing 77% year-over-year growth. The companys systems are gaining traction with customers, as evidenced by recent announcements like DESY using IonQ Aria to optimize airport gate assignments and Oak Ridge National Lab leveraging IonQ to explore power grid optimization. IonQs technology is helping solve real-world problems today.

The company raised its full-year 2024 bookings guidance range to $75-$95 million, suggesting accelerating commercial momentum. IonQ also noted its sales pipeline is expanding significantly in deal size, volume and visibility. Analysts currently expect IonQs revenue to reach $321 million by 2027, representing a 106% CAGR from 2023 levels.

From a valuation perspective, IonQ trades at a more reasonable 50x forward sales multiple compared to some other early-stage, high-growth technology stocks. If IonQ can sustain its triple-digit revenue growth and make continued technical progress, the companys valuation could expand considerably in the coming years. Analysts average price target of $16.50 implies the stock could more than double from current levels over the next year.

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Quantum Computing (NASDAQ:QUBT) develops hardware-agnostic quantum software solutions, enabling its software to run on various quantum machines.

QUBT reported a few encouraging data points in Q1. Operating expenses decreased 18% year-over-year to $6.4 million, driven by a 25% reduction in selling, general and administrative expenses. It also reported an increase in total assets and a decrease in total liabilities compared to year-end 2023. The company ended Q1 with $6.1 million in cash, up from $2.1 million at the end of 2023.

As for valuation, QUBTs current market cap of around $52 million looks quite steep for a pre-revenue company with consistent heavy losses. The stock trades at nearly 142x sales based on Q1s $27,000 revenue run-rate. Of course, this is not a meaningful valuation indicator given the tiny revenue base. But it does highlight how much future growth is baked into the stock price already.

The one analyst covering QUBT has a $8.75 price target, representing a staggering 1,426% upside from current levels. This price target is stale (from November 2023) and may not fully reflect market realities. Still, it could be one of those undiscovered quantum computing stocks that investors should look more into.

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

On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.

Matthew started writing coverage of the financial markets during the crypto boom of 2017 and was also a team member of several fintech startups. He then started writing about Australian and U.S. equities for various publications. His work has appeared in MarketBeat, FXStreet, Cryptoslate, Seeking Alpha, and the New Scientist magazine, among others.

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Treasure Hunt: 3 Quantum Computing Stocks Wall Street Hasnt Discovered Yet - InvestorPlace