Quantum Computing vs. Traditional AI: Must-Have Tech Stocks for 2025

Quantum computing has recently emerged as a hot topic on Wall Street. Following the announcement from Alphabet (GOOG) regarding its latest quantum chip, Willow, the excitement surrounding quantum stocks has surged. Alphabet disclosed that Willow can significantly decrease errors as it expands, and it was able to conduct a standard benchmark computation in a mere five minutes, a task that would take one of the world’s fastest supercomputers approximately 10 septillion years to complete.

This breakthrough ignited a rally in Alphabet's stock and led to a spike in shares of small-cap quantum computing companies such as D-Wave Quantum (QBTS), Quantum Computing (QUBT), Rigetti Computing (RGTI), and IonQ (IONQ). However, come January, these stocks faced a significant decline following critical remarks from prominent tech leaders. For instance, Nvidia CEO Jensen Huang stated that widely useful quantum computing technology is still 15 to 30 years away. Additionally, Meta Platforms CEO Mark Zuckerberg echoed this viewpoint, suggesting that advanced AI may be available before quantum computing becomes practical. Former Cisco Systems CEO John Chambers also indicated that quantum computing remains a distant prospect in what he referred to as the "AI decade."

Notwithstanding, leaders in the quantum sector have strongly defended their technology and the potential of their companies.

Quantum Computing vs. AI: Which Investment Is Better?

It’s important for investors to recognize that quantum computing is still in its early stages. Companies like Quantum Computing, D-Wave Quantum, and Rigetti Computing currently generate little to no revenue. While IonQ is the largest among these companies, its projected revenue for 2024 is only between $38 million and $42 million, despite experiencing a doubling of revenue in the third quarter. With a market capitalization of $9 billion, IonQ’s trading at a price-to-sales ratio exceeding 200 indicates that investors are making significant bets on its future.

The question of whether quantum computing stocks hold sufficient potential is still up for debate, particularly regarding the timeline for when they might become truly disruptive. In contrast, traditional AI technology is already creating real impact, expanding quickly, and transforming numerous industries. AI stocks likely have more growth opportunities ahead. Here are two AI stocks to consider investing in today.

1. Micron Technology

Micron Technology (MU) is widely recognized as a memory chip supplier, and currently, it is experiencing a notable uptick in demand driven by AI technologies, similar to other companies in its sector. In its fiscal first quarter, which concluded in November, Micron's revenue soared by 84%, reaching $8.7 billion. A key highlight was its impressive growth in the data center sector, where revenue skyrocketed more than 400% year-over-year and 40% sequentially, largely attributed to strong demand from AI. Micron has a close working relationship with Nvidia, considered its largest customer, and its stock recently rebounded after Nvidia confirmed the use of Micron chips in its new Blackwell platform.

Micron also presents a compelling opportunity for investors now, as its stock price dipped following a recent earnings report that offered weaker guidance. However, management has expressed confidence in returning to robust growth, which could lead to considerable stock gains in the future. Currently, with a forward P/E ratio of 14, Micron appears undervalued relative to its growth potential.

2. TSMC

Another AI stock that stands out as a must-have for 2025 is TSMC (TSM), or Taiwan Semiconductor Manufacturing Company. TSMC is the world's largest contract chip manufacturer, producing chips for major firms like Nvidia, Apple, and Broadcom. This dominant positioning allows TSMC to maintain a market share of over 50% in third-party chip manufacturing and around 90% in advanced chips. In essence, it serves as a critical component of the global economy.

In the latest quarter, TSMC further solidified its lead in advanced chip production, with advanced chips accounting for 74% of its revenue, categorized as 7 nanometers or less technology. The company achieved revenue growth of 38%, with its operating margin nearing 50% in the same period.

Given the continued rise in AI demand and a general recovery in the semiconductor sector, TSMC is poised for another prosperous year in 2025 and beyond.

Quantum, Computing, Stocks