IBM: A Sensible Way to Gain Exposure to Quantum Computing

Marcus Lindstrom International Business Machines (NYSE:IBM) has been making significant strides in the quantum computing sector, positioning itself as a leader in this rapidly evolving field. As IBM continues to invest in and advance its quantum computing capabilities, it offers investors a sensible way to gain exposure to this transformative technology. Here's why IBM stock is an attractive option for those looking to capitalize on the quantum computing revolution.

IBM's Quantum Computing Progress

IBM has been at the forefront of quantum computing research and development for several years. In 2021, the company broke the 100-qubit barrier with its 127-qubit IBM Quantum Eagle processor, demonstrating significant speedup in simulating molecules (Source: IBM's Summary and IBM Quantum 2022 Updated Development Roadmap). This achievement, along with IBM's ongoing investment in quantum computing, has positioned the company as a leader in the field.

IBM's Strategic Partnerships

IBM's strategic partnerships with hyperscalers, service providers, and global system integrators play a crucial role in its quantum computing success. These collaborations enable IBM to leverage the strengths of each partner, creating a robust ecosystem that supports the development and deployment of quantum computing technologies. For instance, IBM's partnership with Amazon Web Services (AWS) allows users to access IBM's quantum computers through the AWS cloud, simplifying the process of running quantum workloads (Source: IBM Blog, August 2024).

IBM's Quantum-Centric Supercomputing

IBM's approach to quantum-centric supercomputing differentiates it from competitors by focusing on integrating quantum and classical resources to maximize computational efficiency. This strategy leverages parallelism and concurrent execution, optimizing performance by utilizing both quantum and classical computation simultaneously. IBM's modular architecture, as seen in the IBM Quantum System Two™, serves as the backbone for its quantum-centric supercomputing model, allowing for the connection of processors and optimization of classical and quantum communication to take on larger-scale quantum computing tasks.

IBM's Global Infrastructure Expansion

IBM's commitment to expanding its global quantum infrastructure, as seen with the inauguration of its first European quantum data center in Ehningen, Germany, demonstrates the company's long-term vision and dedication to making quantum technology commercially viable. This regional expansion allows IBM to provide utility-scale quantum computing services to a broader range of clients, increasing the potential for revenue growth and market penetration.

Investment Opportunities in IBM Stock

Given IBM's unprofitable business model and its ongoing investment in quantum computing, it's challenging to model the company's expected free cash flow (FCF) through 2025. However, IBM's strategic partnerships, quantum-centric supercomputing approach, and global infrastructure expansion position it well to capitalize on the growing quantum computing market.

Investors who missed buying IBM's stock at its recent lows may consider an opportunity to jump on the bandwagon now, as the company's quantum computing initiatives gain traction. However, those who chased its highs in 2021 have likely already given up on their remaining positions. Our assessment suggests that there are better ways to play the quantum computing revolution. Investors can consider investing in other tech giants or startups with a strong focus on quantum computing, such as NVIDIA (NVDA) or Alphabet (GOOGL). However, if you managed to capitalize on the recent bottom in IBM, we believe it's an opportune time to maintain or even increase your exposure, given the significant potential in the quantum computing sector.

Rating: Buy (Revise from Hold).