Forget Nvidia—This AI Stock Is Primed to Dominate Quantum Computing

Quantum computing's 'Nvidia moment' might be closer than you think—and this AI stock holds the keys.

While Wall Street obsesses over classical AI chips, a dark horse is quietly building the infrastructure for the next computational revolution. No hype, just cold-hard qubit progress.

The quantum arms race is heating up

Forget million-dollar supercomputers—the real money's in controlling the quantum stack. This company's patents read like a cheat code for entanglement, positioning them as the potential Switzerland of quantum hardware.

Short sellers hate this one weird stock

Traditional investors still think quantum computing is sci-fi. Meanwhile, this firm's R&D budget would make a FAANG CEO blush—and their prototypes are already outpacing IBM's roadmap. (Cue the usual 'this time it's different' chorus from the same analysts who missed crypto.)

One thing's certain: When quantum finally hits mainstream, the market will crown its Nvidia. Smart money's betting it won't be who you expect.

How is Alphabet building quantum computing applications?

Back in December, Alphabet unveiled its latest breakthrough in the quantum computing arms race: a processor called Willow. With 105 qubits and enhanced algorithmic features across error correction, Willow might appear as just another incremental improvement over prior generations of quantum chips released by Alphabet and its peers.

Where Willow caught the attention of AI enthusiasts was through an experiment in Random Circuit Sampling (RCS), in which its quantum processing was measured against classical supercomputers. In this study, Alphabet claims that Willow solved a sophisticated series of computations in under 5 minutes that would take today's most capable supercomputers an estimated 10 septillion years to complete.

Image source: Getty Images.

Why Alphabet is to quantum computing what Nvidia is to AI

While Alphabet's quantum supremacy may not have ample commercial uses today, the idea here is that the company's innovations and technological breakthroughs are similar to that of Nvidia and the invention of the GPU back in the late 1990s. Willow and the GPU both represent underlying proof that Alphabet and Nvidia have been at the forefront of innovations where conventional approaches are not able to compete at scale.

Similar to Nvidia, Alphabet is not building its AI business through a singular lens. Under its umbrella, Alphabet has TensorFlow -- an open-source machine learning platform. In addition, Alphabet's Google Quantum AI team operates an open-source software framework called Cirq, which helps Python developers research and build applications. Lastly, Google DeepMind serves as a research lab spanning various aspects of the AI spectrum, including quantum computing.

To me, the formation of Alphabet's AI ecosystem aligns closely with Nvidia's approach. Outside of its hardware specialty, Nvidia also offers software through its CUDA infrastructure. This decision ultimately created a virtuous cycle in which developers building generative AI applications continually demand additional GPU and software capacity -- leading to a self-reinforcing technological moat for Nvidia.

I think Alphabet is employing a similar strategy, betting that classical computing will eventually become exhausted by increasingly sophisticated AI workloads. When this occurs, Alphabet will have already architected the leap from classical to quantum computing.

Just as Nvidia has done throughout the AI revolution thanks to its GPUs and software platform, Alphabet could one day be positioned as the main ecosystem on which quantum applications are developed.

Is Alphabet stock a buy right now?

Throughout the AI revolution, many of Alphabet's peers have experienced notable expansion in their valuation multiples.

GOOGL PE Ratio (Forward) data by YCharts

At the moment, however, Alphabet is trading roughly in line with its three-year average forward price to earnings (P/E) ratio. Not only is the valuation discount to its peers striking, but I think it's overstated.

Over the last three years, Alphabet has continued to innovate across several areas of AI, including new capabilities in search, video, e-commerce, cybersecurity, and of course, hardware such as quantum chips. Nevertheless, the upside from these investments do not appear to be fully priced into the company's long-term financial success.

Just as Nvidia has proven to be one of the most lucrative long-term buys of the decade, I see Alphabet positioned to follow a prolonged breakout period featuring notable valuation expansion as its AI-powered products continue to scale and become a more central part of the company's growth narrative. For these reasons, I think that Alphabet stock is dirt cheap and looks like a compelling opportunity at its current price level.