Quantum computing is still in its early innings, but it’s already clear that this is a disruptive technology that has a variety of use cases.
As is the case with other disruptive growth market segments, there are some speculative names in the quantum computing space. However, some of the prime competitors in this arena are large- and mega-cap companies that legions of investors are already familiar with.
On that note, the Invesco QQQ Trust (QQQ ) and the Invesco NASDAQ 100 ETF (QQQM ) are examples of well-known exchange traded funds with credible quantum computing exposure, meaning that investors don’t have to stock-pick in this emerging growth space.
“QC is a nascent, disruptive technology that can drive a several orders of magnitude leap in compute performance even before fault-tolerant quantum systems can be fully industrialized. In the interim, we expect QC will be complementary to ‘classical’ (current digital) computing,” according to Cowen research. “Superconducting gate technology has the most adoption momentum currently, given performance scaling leadership though alternative modalities including ion trap, photonics, and cold/neutral atom devices are also likely to make material progress and warrant monitoring.”
For investors considering QQQ and QQQM, that’s encouraging commentary because it indicates that quantum computing has myriad applications and intersects with other disruptive technologies, in turn bolstering its long-term use case.
Adding to the allure of the Invesco ETFs and quantum computing at large is Cowen’s forecast that the space is poised to growth at a compound annual growth rate (CAGR) of 50% through 2025. That’s exponential growth that investors are hard-pressed to find elsewhere.
“Given the early-growth stage of the QC industry, we estimate the TAM can grow at a 50% CAGR from a low base of ~$475M in CY21 to approach ~$2.5B by CY25 and ~$19B by CY30. This is predicated on continued hardware infrastructure build out, availability of enterprise software products, and meaningful adoption of Quantum Computing as a Service (QCaaS) offerings,” added Cowen.
Both QQQ and QQQM track the Nasdaq-100 Index (NDX), and that benchmark is home to credible quantum computing contenders, including, in order of weight in the index, Microsoft (NASDAQ:MSFT), Amazon (NASDAQ:AMZN), Google parent Alphabet (NASDAQ:GOOG), Nvidia (NASDAQ:NVDA), and Honeywell (NASDAQ:HON).
Microsoft and Amazon combine for roughly 17% of the cap-weighted Nasdaq-100, while Alphabet and Nvidia combine for over 10%. Honeywell is the largest industrial holding in QQQ and QQQM and represents 1.14% of the ETFs’ rosters.
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