IBM vs. D-Wave: Which Quantum Stock Is a Better Buy Now?

There’s still plenty of room for growth as the AI race continues to unfold. Still, some growth investors are already moving on to the next revolutionary technological leap with various quantum computing stocks. Indeed, quantum computing still has many setbacks it needs to tackle before more practical quantum computers can change the world.

With Nvidia (NASDAQ:NVDA) CEO Jensen Huang recently taking on a more optimistic view of quantum, it seems like the quantum race has already kicked off. And with a number of mega-cap firms, like International Business Machines (NYSE:IBM), and smaller quantum pure-plays, like D-Wave Quantum (NASDAQ:QBTS), hard at work to help make the next generation of quantum computers a reality, it seems like prime time to punch a ticket while we’re still in the very nascent stages.

In the coming years, we’ll learn more about the quantum timeline. And if it co-exists alongside the AI boom, there could be major spoils to be had for investors who spot the right winners early on in the game. As always, it’s easier said than done. Either way, this piece will look at two of the most intriguing quantum plays that are probably at (or close to) the top of the list of stocks to buy to play the rise of quantum computers.

Still, the big question on the minds of growth investors is which angle is best to play quantum? Should one stick with the diversified blue chip? Or go with the higher-upside bet in a promising pure-play before most other investors start catching on?

International Business Machines

IBM’s comeback has been decades in the making, and the recent rally probably isn’t over yet, especially as IBM sheds more light on the quantum leap it expects to have over the next five years. Also, having plenty of skin in the AI game doesn’t hurt the case for betting on the blue chip known as Big Blue, even as its trailing price-to-earnings (P/E) multiple flirts with 50 times.

With the stock up 30% year to date, 56% in the past year, and 111% in the past two years, IBM stock is a high-momentum hero again. Perhaps it’s not all too obscene to imagine the former Warren Buffett stock setting the stage for a run to become a $1 trillion company.

In any case, I still think there’s ample value to be had in the 2.3%-yielder as the pace of quantum headlines starts to pick up. Recently, IBM announced its strategic partnership with mRNA vaccine innovator Moderna (NASDAQ:MRNA) for work on a “quantum-enabled biotechnology pipeline.”

That’s a profound development that probably should have sent IBM shares markedly higher. Either way, if the collaboration yields a revolutionary medicine, perhaps the quantum stocks could be in for another leg higher. In any case, I’m a big fan of IBM as the worlds of AI and quantum computing help IBM return to the high-growth track.

D-Wave Quantum

D-Wave Quantum is a higher-upside quantum pure-play with a $5.9 billion market cap that may seem speculative to some. The stock has gained 24% in a week, 97% year to date, and more than 1,750% in the past year. Indeed, the name exploded onto the scene seemingly overnight. And despite the surge, Mad Money host Jim Cramer still thinks the name is worth owning, as it’s a “real company” in the quantum computing world that can move up greatly on industry headwinds.

Indeed, D-Wave may very well be the most exciting mid-cap stock in America, especially after announcing that its sixth-generation quantum computer will be available via cloud. That’s a huge deal that has Wall Street talking. With its Advantage2 quantum computer already on the commercial market, perhaps “useful” quantum computers have already landed. Time will tell what the implications are for QBTS stock.

Either way, I think the name is worth hanging onto for the long term for those who can handle the off-the-charts level of volatility. Perhaps nibbling on a few shares today and buying into the next big pullback could be the best way to manage the huge ups and downs expected from the hyper-volatile hyper-growth sensation.

What’s the better buy?

It’s a tough call. I think investors fearful of choppiness ought to view IBM as a better bet right here due to its modest multiple and still awe-inspiring Quantum Starling project. If D-Wave sells off at some point, I’d be more enticed to give the mid-cap innovator a second look. Either way, I’m not against owning both companies at this pivotal moment for quantum computing.

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