In the rapidly evolving tech space, the exertion for innovation often leads to the intersection of quantum theory and corporate strategy. Among quantum stocks, these progressive companies are shaping the future.
These entities represent not just opportunities but the edge of technological advancement in quantum computing. From the first one’s diversified portfolio to the second one’s quantum computing prowess and the third one’s quantum leaps in revenue, each company offers a massive price return potential on their stocks.
Fundamentally, the first one has organic sales growth and shrewd strategic investments. The second one has spikes in deal sizes and a firm grip on the commercial market. Finally, the third is spearheading advancements in quantum computing with innovative system generations.
The article delves into these companies’ quantum computing leads, strategic expansion and related performance. Read more to learn the fundamentals behind these quantum stocks and their implications for the future of technology and market valuations.
Honeywell (HON)
Honeywell (NASDAQ:HON) reported good performance, an edgy portfolio and strategic move support valuations. The company delivered its promises for Q4 and 2023 despite the adverse macroeconomic environment.
The company achieved organic sales growth of 4% year-over-year (YoY) for 2023, with segment margin expansion of 1% to 22.7%. Moreover, the adjusted earnings per share climbed 5% yearly to $2.60 (Q4 2023). Likewise, free cash flow emerged as $4.3 billion, which can be characterized as being at the upper end of the guided range. Through robust operational capabilities, Honeywell can hit or even surpass its targets.
On the other side, Honeywell has a diverse multiband business portfolio involving tech solutions across broad industrial sectors. That involves aerospace and automotive systems, building technologies, performance materials and technologies and safety & productivity solutions. Such business segment diversity helps support Honeywell’s possible value growth. A good example is Honeywell’s aerospace sector’s 11th consecutive double-digit quarterly increase. That is based on solid performance in commercial original equipment and aftermarket segments.
Additionally, the diversification of Honeywell’s portfolio reduces its reliance on any single market. That mitigates the risks associated with sector-specific fluctuations. Also, this diversification supports Honeywell’s ability to capitalize on demand in high-growth areas.
Furthermore, Honeywell’s edgy approach to portfolio optimization and strategic investments is evident in its recent acquisition of Carrier’s Global Access Solution business. This acquisition (for nearly $5 billion) aligns with Honeywell’s focus on high-margin product businesses within building automation and strengthens its security solutions portfolio. Additionally, the company’s investment in Quantinuum (engaged in quantum computing) suggests its focus on growth areas.
Finally, by strategically investing in complementary businesses and emerging tech, Honeywell boosts its competitive position and expands its addressable market. Hence, these investments position the company at a high valuation.
D-Wave Quantum (QBTS)
D-Wave Quantum (NYSE:QBTS) has fundamental strengths that support its rapid value growth potential. Firstly, D-Wave has experienced continuous sequential and YoY growth in customer bookings and commercial revenue. For instance, in Q3 2023, bookings increased by 53% YoY to hit $2.9 million. That marked the sixth consecutive quarter of YoY growth in bookings. Similarly, revenue grew by 51% YoY in Q3 to hit $2.6 million.
Financially, the consistent growth in bookings and revenue suggests D-Wave’s capability to attract and retain customers. The trend implies the company may continue to capitalize on the demand within its $100 billion target market and gain traction.
Additionally, the average deal size per booking has increased (a massive one). This rises 172% YoY for commercial customers and 178% YoY during the trailing 12 months (ended Q3). The increase in the average deal size suggests that D-Wave is securing larger contracts. Also, that reflects the company is edging deeper into its target market and expanding its reach within existing customer accounts. Larger deal sizes fundamentally lead to higher topline generation, fueling the company’s potential valuations.
In the same direction, D-Wave has solid commercial traction, with revenue derived from commercial customers increasing YoY by 62% over the trailing 12 months (ended Q3). Additionally, the average revenue per commercial customer was boosted by 68% during the same period.
Finally, the increase in commercial revenue as a percentage of total revenue, which increased to 70% from 50%, suggests the company’s focus on serving enterprise clients and monetizing its quantum computing. Also, there has been growth in the number of commercial customers, including nearly 24 Forbes Global 2000 constituents. Therefore, that indicates D-Wave’s capability to attract high-profile clients and solidify its valuation expansion potential.
IONQ (IONQ)
IONQ’s (NYSE:IONQ) performance, tech advancements and strategic expansion support the market valuation and related expansion. For instance, in Q3 2023, IONQ’s topline marked a year-over-year increase of 122% (a big jump!). That indicates the company’s capability to generate substantial revenue growth — vital for its sustained expansion.
Similarly, IONQ added $26.3 million in bookings during Q3 2023, breaching its quantum computing systems. By the end of 2023, IONQ was on track to exceed its target of cumulative bookings totaling $100 million since the start of 2021, reflecting consistent momentum and customer interest.
Additionally, the company increased its 2023 revenue outlook from $21.2 million to $22.0 million. It is confident in accelerating delivery against milestones on customer contracts. Also, IONQ uplifted its 2023 booking guidance to between $60 million and $63 million, highlighting continued strong demand and revenue potential.
On the product side, IONQ introduced two new system generations, Forte Enterprise and Tempo. They are designed to address different market segments and applications. These systems target reducing footprints, enhancing modularity and integrating seamlessly into existing data centers. That suggests the company’s focus on capturing the quantum computing demand.
Furthermore, the company has attained milestones in performance, including reaching AQ 29 on a barium-based system. That validates IONQ’s lead in advancing trapped-ion quantum computing and positions it closer to hitting AQ 64.
Finally, IONQ may reach AQ 64 and attain a commercial advantage through error mitigation, reducing the need for full error correction. Therefore, this strategy improves the company’s probability of hitting its technical goals in the near term while optimizing resource utilization and igniting rapid ascents in valuations.
On the date of publication, Yiannis Zourmpanos did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
