The quantum computing segment of the technology sector continues to gain traction with the rising adoption of this new-era computing to utilize advanced technologies. Because quantum computing is more powerful and overcomes the limitations of classic computing, this space is expected to continue witnessing rising demand, primarily from digitized companies.
Given quantum computing’s growth prospects, tech giants are investing significantly in the space to grab market share. According to Market Watch, the global quantum computing market is expected to grow at a 36.5% CAGR through 2028.
So, we think it could be wise to bet now on fundamentally strong quantum computing stocks Microsoft Corporation (MSFT), Alphabet Inc. (GOOGL), International Business Machines Corporation (IBM), and Hitachi, Ltd. (HTHIY).
Microsoft Corporation (MSFT)
Technology giant MSFT’s broad product portfolio includes personal computers, tablets, gaming and entertainment consoles, and related accessories. In addition, the Redmond, Wash.-based company is making several advances in the cloud space with the help of Microsoft Azure.
On Jan. 25, 2022, Satya Nadella, chairman and CEO, MSFT, said, “As tech as a percentage of global GDP continues to increase, we are innovating and investing across diverse and growing markets, with a common underlying technology stack and an operating model that reinforces a common strategy, culture, and a sense of purpose.”
MSFT’s total revenue came in at $51.73 billion for its fiscal fourth quarter, ended Dec. 31, 2021, up 20.1% year-over-year. The company’s net income came in at $18.77 billion, up 21.4% year-over-year. Also, its EPS increased 22.2% year-over-year to $2.48. Furthermore, its cash and cash equivalents were $20.60 billion for the period ended Dec.31, 2021, compared to $14.22 billion for the period ended June 30, 2021.
For its fiscal 2022, analysts expect MSFT’s revenue to be $199.05 billion, representing an 18.4% year-over-year rise. In addition, the company’s EPS is expected to increase 16.1% year-over-year to $9.35 for fiscal 2022. It surpassed the consensus EPS estimates in each of the trailing four quarters. And over the past year, the stock has gained 24.5% in price to close yesterday’s trading session at $302.38.
MSFT’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to a Buy in our POWR Rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
Also, the stock has an A grade for Sentiment and a B grade for Stability and Quality. Within the Software-Application industry, it is ranked #19 out of 165 stocks. Click here to see the additional POWR Ratings for Growth, Value, and Momentum for MSFT.
Click here to check out our Software Industry Report for 2022
Alphabet Inc. (GOOGL)
Mountain View, Calif.-based GOOGL provides online advertising services in the United States, Europe, the Middle East, Africa, Asia-Pacific, Canada, and Latin America. The company offers performance and brand advertising services and operates through Google Services, Google Cloud, and Other Bets segments.
On Feb. 1, 2022, Sundar Pichai, CEO of GOOGL, said: “Our deep investment in AI technologies continues to drive extraordinary and helpful experiences for people and businesses across our most important products.”
GOOGL’s revenues increased 32.4% year-over-year to $75.33 billion in the fourth quarter, ended Dec. 31, 2021. Its net income came in at $20.64 billion, up 35.6% year-over-year, and its EPS came in at $30.69, up 37.6% year-over-year.
Analysts expect GOOGL’s revenue to increase 17.9% year-over-year to $303.76 billion in its fiscal 2022. Also, its EPS is also expected to grow 16.7% to $135.27 for its fiscal 2023. In addition, it has surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 32.9% in price to close yesterday’s trading session at $2,772.40.
GOOGL’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which indicates a Buy in our proprietary rating system. GOOGL has an A grade for Sentiment and a B grade for Quality. Within the Internet industry, it is ranked #4 out of 78 stocks. Click here to see the additional POWR Ratings for Growth, Value, Momentum, and Stability for GOOGL.
International Business Machines Corporation (IBM)
IBM in Armonk, N.Y. provides integrated solutions and services worldwide. It operates in Cloud & Cognitive Software; Global Business Services; Global Technology Services; Systems; and Global Financing segments
On Jan. 24, 2022, Arvind Krishna, IBM chairman and CEO, said, “Our fourth-quarter results give us confidence in our ability to deliver our objectives of sustained mid-single-digit revenue growth and strong free cash flow in 2022.”
IBM’s total revenue came in at $16.7 billion for the fourth quarter ended Dec. 31, 2021, up 6.5% year-over-year. Its net income came in at $2.33 billion, up 72% year-over-year, while its EPS increased 70.2% year-over-year to $2.57.
IBM’s revenue is expected to grow at 5.9% year-over-year to $60.74 billion in 2022. Its EPS is also expected to grow 24.6% to $9.88 in 2022. It surpassed the consensus EPS estimates in each of the trailing four quarters. Over the past year, the stock has gained 14.4% in price to close yesterday’s trading session at $133.52.
IBM has an overall B rating, which equates to a Buy in our proprietary rating system. In addition, it has a B grade for Value and Quality. IBM is ranked #15 of 81 stocks in the Technology - Services industry. Click here to see the additional POWR Ratings for IBM (Growth, Momentum, Stability, and Sentiment).
Hitachi, Ltd. (HTHIY)
Headquartered in Tokyo, Japan, HTHIY provides information technology, energy, industry, mobility, and intelligent life solutions in Japan and internationally. The company offers information and telecommunication services.
On Dec. 14, 2021, Hitachi America, Ltd. and REE Automotive (REE) announced a newly formed strategic agreement to ease and accelerate the adoption of electric vehicles (EV) across the entire EV value chain. Hicham Abdessamad, Chairman and CEO, Hitachi America, Ltd., said, “We are excited to partner with REE to help accelerate the transition to EVs globally.”
HTHIY’s revenues for the nine months ended Dec. 31, 2021, came in at $63.88 billion, up 22.9% year-over-year. Its net income was $4.45 billion, up 63.1% year-over-year. And its EPS came in at $4.05, up 46.3% year-over-year.
HTHIY’s revenue is expected to increase 4.5% to $86.01 billion in 2022. Its EPS is estimated to increase 38.4% to $13.56 in 2022. The stock surpassed EPS estimates in each of the trailing four quarters. And over the past year, it has gained 10.2% in price to close yesterday’s trading session at $103.75.
According to our POWR Ratings, HTHIY has an A grade for Value and a B grade for Stability. It is ranked #40 of 92 stocks in the Industrial - Equipment industry. Click here to see the additional POWR Ratings for HTHIY (Growth, Momentum, Sentiment, and Quality).
MSFT shares were trading at $300.63 per share on Friday morning, down $1.75 (-0.58%). Year-to-date, MSFT has declined -10.61%, versus a -5.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Riddhima Chakraborty
Riddhima is a financial journalist with a passion for analyzing financial instruments. With a master's degree in economics, she helps investors make informed investment decisions through her insightful commentaries.
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