This Tech Giant Just Pulled the Curtain on a New Quantum Computer

International Business Machines (NYSE:IBM) is having quite the comeback. The legacy tech company’s stock is now up nearly 69% over the past year, including more than 32% year-to-date, thanks in part to its more appreciated role in the AI race and — perhaps most exciting — its early ticket to the quantum computing race. Undoubtedly, IBM stock was stuck in a more-than-decade-long hibernation prior to its big breakout, which started at the start of 2023. 

Indeed, the firm known as Big Blue is back in a big way, and its current 2.31% dividend yield is incentivizing the pot for prospective shareholders. 

Key Points in This Article:

• IBM’s Quantum Starling can perform 100 million quantum operations and could be the future of the company’s quantum computing focus.
• The stock’s comparatively low P/E ratio suggests IBM is undervalued at current prices. 
• If you’re looking for a megatrend with massive potential, make sure to grab a complimentary copy of our “The Next NVIDIA” report. This report breaks down AI stocks with 10x potential and will give you a huge leg up on profiting from this massive sea change.

Is Big Blue the Blue-Chip Bet for the Future of Quantum Computing?

The former Warren Buffett stock (the Oracle of Omaha exited his entire stake a few years ago) suddenly went from a low-growth legacy stalwart in the tech sector to becoming one of the more intriguing frontrunners in a number of fields. Of course, IBM isn’t just getting into the quantum scene.

Like with its AI efforts, the company has been investing heavily in quantum computing-related R&D for quite a while now. In fact, such projects have cost a pretty penny with less clarity in terms of what such initiatives would yield in terms of returns. With the firm recently pulling the curtain on a profound industry breakthrough with its large-scale “fault-tolerant” quantum supercomputer, perhaps IBM, a once boring stock among growth investors, is now the stock to own as it adds to its recent momentum in an attempt to make higher highs.

Enter IBM Quantum Starling, a computer that can perform 100 million quantum operations with 200 logical qubits. In simple terms, this quantum computer is head and shoulders above what’s available on the market today. Perhaps most exciting is that the computer may have gotten error correction right. The computer, designed to correct errors in real-time, is due to be delivered by 2029. It’ll be an industry-first and could mark the start of a quantum computing race of sorts.

Could it be that IBM has solved one of the biggest problems holding quantum computing back? Possibly. In any case, IBM stock looks cheap enough for value investors to own, exciting enough for tech investors to back up the truck on, and hot enough for momentum investors to punch their ticket. 

IBM’s Stock Still Looks Cheap Despite Its Roadmap to Quantum Supremacy

Indeed, much of the quantum (and AI) hype has already had a chance to bake its way into IBM stock. And while the name is the priciest it’s been in recent memory, I find it to be a relative value play for the magnitude of innovation you’re getting. At the time of this writing, shares of IBM trade for 26.4 times forward price-to-earnings (P/E). If IBM has, in fact, “cracked the code” on quantum correction, I wouldn’t be surprised if another doubling of shares is in the cards by the time Starling hits the ground running in around four years’ time.

Wedbush Securities analyst Dan Ives recently hiked his price target on IBM stock to $325.00 from $300.00, on its impressive AI drivers. Notably, AI agents and WatsonX could be needle-movers until IBM is ready for its big quantum moment. While investors will still need to wait a few years for Starling, IBM will be launching its Quantum Nighthawk chip in the second half, which could keep momentum alive and well in the stock. Though Ives acknowledged that quantum is still in “the early stages,” he did note that the firm is “taking this multi-billion-dollar quantum computing industry head-on.”

More broadly, 14 Wall Street analysts give IBM a consensus “Moderate Buy” rating, with seven analysts assigning the stock a “Buy” rating, five assigning it a “Hold” rating and two assigning it a “Sell” rating. 

Indeed, IBM is one of the quantum frontrunners, and its stock has many catalysts to keep the stock driving in the fast lane. As far as I’m concerned, IBM remains a value stock, with more than enough innovation to drive multiple expansion over the coming quarters and years. 

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