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The quantum computer market is expected to grow dramatically in the next 10 years which should present an incredible opportunity for investors. The $64M question, however, is "Which AI semiconductor stocks are positioned to make the most of this exceptional growth?". To that end, this article examines 15 such stocks in munKNEE's AI Quantum Computing Stocks Index that are heavily involved in the res

earch and development of qubits and whose stock appreciation YTD (as of September 15th) reflect the success of their efforts.

What Is the Semiconductor Market Size and Growth Expectation?

According to a report by Precedence Research:

• the global semiconductor market is valued at $664.2 billion and is estimated to grow to $1.88 trillion by 2032 at a compound annual growth rate (CAGR) of 12.28% spurred on by the rising popularity of the latest technologies such as artificial intelligence and the Internet of Things that allows the memory chips to process huge volume of data in less time which is expected to provide growth opportunities to the market players in the foreseeable future.
• North America and Europe are expected to have a substantial growth rate going forward owing to the presence of a strong telecom and automotive industry and the rising investments in U.S. in research and development activities.

What Is Quantum Computing?

Quantum computing, unlike classical computing where data is known as a bit which can be either 0 or a 1 thus giving it binary qualities:

• uses qubits instead of bits and they:
  • exist in any proportion of both states at the same time (superposition) and
  • can be entangled or invisibly connected (i.e., if one qubit is altered, the other reacts at the same time allowing such computers to process vast amounts of information simultaneously) and this permits an enormous leap in processing power.

The munKNEE AI Quantum Computing Stocks Index

Below are:

• descriptions of each of the 15 companies,
• their market share of the semiconductor sector,
• their forward price-to-sales ratio and
• their price/earnings-to-growth ratio to help value all 15 stock prices on a comparative basis,
• their market share of the $664.2B semiconductor market, and
• how their stocks have performed YTD (as of September 15th), in descending order.

All the stocks:

• have market capitalizations in excess of $50B except IonQ @ $3.5B and
• are trading in excess of $35/share in USD except IonQ @$17.08 and
• have data based on their stock prices as of last Friday, September 15th. (The data changes daily as the stock prices change.)

1. IonQ (IONQ): UP 395.1% YTD
   • uses trapped-ion technology in its processing units which relies on suspending ions in space using electromagnetic fields, and transmitting information through the movement of those ions in a “shared trap”
   • currently has 2 quantum systems: an 11-qubit system launched in 2020; a 25-qubit system launched in 2022; and has a 32-qubit system under development and in beta testing with researchers.
   • Semiconductor Market Share: 2.5%: *Forward Price-to-Sales Ratio: 149.9; **Price/Earnings-to-Growth Ratio: N/A
   •  Read:
     • 5 ‘Strong Buy’ Quantum Computing Stocks You Should Be Loading Up On Now
     • Ride the Quantum Computing Wave to Riches With These 3 Promising Stock Picks
     • IonQ and BearingPoint Bring Quantum Consulting to the European Market
     • Zapata AI and IonQ Collaborate to Advance Generative AI Research
2. Nvidia Corporation (NVDA): UP 200.4% YTD
   • has introduced a platform to construct quantum algorithms by employing widely known classical computer coding languages which have the ability to choose whether to run the algorithm on a classical computer or quantum computing based on efficiency
   • and is the leading designer of graphics processing units required for powerful computer processing.
   • Semiconductor Market Share: 5.5%; Forward Price-to-Sales Ratio: 16.8; Price/Earnings-to-Growth Ratio: 4.04
   • Read:
     • Nvidia stock: 'The easy money has been made,' strategist says 
     • Nvidia is the AI king, but threats to its reign abound
     • Earnings Growth & Price Strength Make Nvidia a Stock to Watch
     • The Bull Market in AI Is Just Getting Started: 3 Smart Reasons to Buy Nvidia Stock Right Now
3. Marvell Technology (MRVL): UP 70.1% YTD
   • is the semiconductor industry’s only data infrastructure specialist. It partners with its customers and the open ecosystem to move, process, store and secure the world’s data–transforming data center, automotive, enterprise and carrier architectures for the better.
   • Semiconductor Market Share: 2.5%; Forward Price-to-Sales Ratio: 8.1; Price/Earnings-to-Growth Ratio: 1.12
   • Read:
     • Marvell Shares Gap Down: Is AI Sentiment Changing?
     • Marvell Technology, Inc. Reports Second Quarter of Fiscal Year 2024 Financial Results
     • Chipmaker Marvell Sees AI Revenue Soaring In The Coming Years
     • Marvell Technology Is the Latest Tech Firm to Benefit From AI
4. Advanced Micro Devices (AMD): UP 62.1% YTD
   • focuses on CPUs and GPUs and, thanks to this focus, its processors for gaming and data centers have helped drive its revenue higher, even as client sales (meaning chips for PCs) have remained stagnant.
   • Also, with the acquisition of Xilinx, AMD is now a major player in the embedded chip market. In the second quarter of 2023, embedded was AMD's fastest-growing segment as chip demand in the automotive, industrial, and other industries continued to rise.
   • AMD released the MI300x in June, a chip it called "the world's most advanced accelerator for generative AI." It intends to ramp up production late in the year.
   • Semiconductor Market Share: 3.7%; Forward Price-to-Sales Ratio: 6.6; Price/Earnings-to-Growth Ratio: 0.90
   •  Read:
     • Calculating The Fair Value Of Advanced Micro Devices, Inc.
     • Will AMD Be a $1 Trillion Stock by 2030?
     • My Take: 4 Strong Growth Stocks to Buy This Week
     • Wall Street Analysts Think Advanced Micro Is a Good Investment: Is It?
5. Lam Research (LRCX): UP 54.7% YTD
   • is a leading manufacturer of equipment used to fabricate semiconductors focusing on the etch, deposition, and clean markets, which are crucial steps in the semiconductor manufacturing process.
   • Semiconductor Market Share: 2.9%; Forward Price-to-Sales Ratio: 5.7; Price/Earnings-to-Growth Ratio: 1.51
   • Read:
     • Unveiling Lam Research's Value: Is It Really Priced Right? A Comprehensive Guide
     • What Makes Lam Research an Attractive Investment?
     • Nvidia vs. Lam Research: Which Hot Stock Is More Attractive?
     • Is Lam Research Outperforming Other Computer and Technology Stocks This Year?
6. Broadcom (AVGO): UP 52.8% YTD
   • 15% of its revenue is directly involved in booming generative AI applications. These include its market-leading switching and routing chips needed to direct data around and between data centers, along with custom ASIC compute offload engines that are now being incorporated into non-Nvidia AI accelerators like Alphabet's tensor processing units.
   • Semiconductor Market Share: 5.9%; Forward Price-to-Sales Ratio: 9.3; Price/Earnings-to-Growth Ratio: 2.94
   • Read:
     • Direct AI Exposure Pushed Broadcom in Q2
     • Will Broadcom Benefit from Explosive Growth in Generative AI?
     • An Insider Bought Almost $10 Million of this AI Stock: Should You?
     • Should You Hold Broadcom for the Long-Term?
7. Applied Materials (AMAT): UP 46.7% YTD
   • is the world's largest supplier of semiconductor manufacturing equipment, providing materials engineering solutions to help make nearly every chip in the world. The firm's systems are used in nearly every major process step with the exception of lithography.
   • Semiconductor Market Share: 4.4%; Forward Price-to-Sales Ratio: 4.5; Price/Earnings-to-Growth Ratio: 3.78
   • Read:
     • Unveiling the Investment Potential of Applied Materials Inc: A Comprehensive Analysis
     • A Look At The Fair Value Of Applied Materials, Inc.
     • 4 big analyst picks: Applied Materials a ‘Top Pick’ at Wolfe
     • Are Robust Financials Driving The Recent Rally In Applied Materials, Inc.'s Stock?
8. Intel (INTC): UP 43.3% YTD
   • has constructed a 49 qubit superconducting chip
   • and has developed a testing tool for quantum computers which allows researchers to validate quantum wafers and check that their qubits are working correctly before they are constructed into a full quantum processor.
   • Semiconductor Market Share: 9.0%; Forward Price-to-Sales Ratio: 2.8; Price/Earnings-to-Growth Ratio: 12.69
   • Read:
     • Unveiling Intel's Value: Is It Really Priced Right? A Comprehensive Guide
     • Intel CEO Says the Chipmaker’s Technology Is Central to AI Boom
     • Intel outlines strategy to dominate AI market with new chip
     • Pay Attention to Intel in the AI Race, Analyst Says
9. Micron Technology (MU): UP 42.3% YTD
   • has announced that it began sampling its own HBM3 chips in July, which feature a 50% improvement in bandwidth over currently available solutions. Mass production is expected to begin early in calendar 2024, and Micron expects meaningful revenue from this product in fiscal 2024.
   • Semiconductor Market Share: 3.0%; Forward Price-to-Sales Ratio: 4.2; Price/Earnings-to-Growth Ratio: 1.12
   • Read:
     • Micron Technology Stock Upgraded by Deutsche Bank On Improved Industry Outlook
     • Micron Technology, Inc. Is a Trending Stock: Facts to Know Before Betting on It
     • AI Is Ending Micron's Downturn
     • Micron Technology to Report Fiscal Fourth Quarter Results on September 27, 2023
10. NXP Semiconductors (NXPI): UP 30.1%
    • designs purpose-built technologies that enable devices to sense, think, connect and act intelligently
    • and is the world leader in secure connectivity solutions for embedded applications in the automotive, industrial & IoT, mobile, and communication infrastructure markets.
    • Semiconductor Market Share: 2.2%; Forward Price-to-Sales Ratio: 3.7; Price/Earnings-to-Growth Ratio: 1.04
    • Read:
      • NXP, Taiwan Semi, Bosch and Infineon Establish Joint Venture to Bring Advanced Semiconductor Manufacturing to Europe
      • Analysts Will Push NXP Semiconductors To A New High
      • NXP Semiconductors Reports Second Quarter 2023 Results
11. STMicroelectronics (STM): UP 25.8% YTD
    • designs and build products, solutions to enable smarter mobility, more efficient power and energy management, and the wide-scale deployment of the Internet of Things and connectivity.
    • Semiconductor Market Share: 2.9%; Forward Price-to-Sales Ratio: 2.2; Price/Earnings-to-Growth Ratio: 0.88
    • Read:
      • BorgWarner to integrate STMicroelectronics’ Silicon-Carbide Technology in Viper Power Module for Volvo Cars’ Next-Generation Electric Vehicles
      • STMicroelectronics Reports 2023 Second Quarter Financial Results
      • STMicroelectronics reveals innovative infrared sensor for presence and motion detection in building automation
      • STMicroelectronics reveals latest FlightSense™ multi-zone distance sensor with camera-like field of view
12. Taiwan Semiconductor (TSM): UP 19.8% YTD
    • is a contract manufacturing and design company and world's largest pure-play independent semiconductor foundry and
    • plans to use its new cloud computing platform to develop quantum computing applications.
    • Semiconductor Market Share: 11.9%; Forward Price-to-Sales Ratio: 0.2; Price/Earnings-to-Growth Ratio: 0.84
    • Read:
      • 1 AI Stock That's a Screaming Bargain You Should Buy Hand Over Fist Right Now
      • 3 Semiconductor Stocks to Bet On for Financially Secure Future
      • 5 AI Stocks You Can Buy and Hold for the Next Decade
      • 16 Facts About TSMC
13. Analog Devices (ADI): UP 9.9%
    • offers DC-to-DC power conversion solutions for various AI accelerator applications
    • Semiconductor Market Share: 1.9% ; Forward Price-to-Sales Ratio: 7.3; Price/Earnings-to-Growth Ratio: 2.03
    • Read:
      • Analog Devices Reports Third Quarter Fiscal 2023 Financial Results
14. Qualcomm (QCOM): UP 5.8%
    • is bringing AI to smartphones and other devices rather than data centers that Nvidia is focused on.
    • Semiconductor Market Share: 6.4%; Forward Price-to-Sales Ratio: 3.4; Price/Earnings-to-Growth Ratio: 1.02
    • Read:
      • Is Qualcomm Stock a Buy After Its New 5G Supply Agreement With Apple?
      • Qualcomm CEO says AI may breathe new life into smartphones: 'It could create a new upgrade cycle'
      • Qualcomm to supply BMW and Mercedes with chips for displays, voice features
      • Qualcomm banks on AI to get a bigger share of the automotive chip market

15. Texas Instruments (TXN): UP 0.9% YTD

    • is a global semiconductor company that designs, manufactures, tests and sells analog and embedded processing chips for markets such as industrial, automotive, personal electronics, communications equipment and enterprise systems.
    • Semiconductor Market Share: 3.7%; Forward Price-to-Sales Ratio: 8.0; Price/Earnings-to-Growth Ratio: 2.99
    • Read:
      • TI reports second quarter 2023 financial results and shareholder returns
      • Texas Instruments Will Benefit From the AI Boom
      • TI unlocks scalable edge AI performance in smart camera applications with new vision processor family

The above 15 stocks are UP 51.0%, on average, YTD (as of September 15th) and they represent 68.4%, in total, of the semiconductor market.

*The Price-to-Sales ratio (PSR) describes how much someone must pay to buy one share of a company relative to how much that share generates in revenue for the company. and, as such, determines whether its stock is cheap or overpriced in comparison to its peers. While the ideal ratio depends on the company and industry, the ratio is typically good when the value falls between one (1)  and two (2) and a ratio of less than one (1`) is even better. According to Eqvista (see here), the average ratio for the semiconductor sector is 9.75.

**The price/earnings to growth ratio (PEG ratio) is considered to be an indicator of a stock's true value. A PEG lower than 1.0 is best, suggesting that a company is relatively undervalued.

Excluded from the above list are:

• Quantum computing and related companies that are listed exclusively on stock exchanges other than Nasdaq,
• some nano and micro cap companies,
• and the following large tech stocks with quantum divisions:

1. Amazon (AMZN)
   • has partnered with the California Institute of Technology to foster the next generation of quantum scientists and fuel their efforts to build a fault-tolerant quantum computer.
   • Read:
     • Of All the AI Stocks, These 2 Impressed Me the Most This Earnings Season
     • How AI Is Revitalizing Amazon's AWS Business: A Closer Look
2. Alphabet (GOOGL)
   • has already built a programmable superconducting processor that is about 158 million times faster than the world’s fastest supercomputer
   • and is continuing to push innovation in quantum computing, from hardware control systems and quantum control to physics modeling and quantum error correction.
   • Read:
     • Google's patent may save some power on AI development; 
     • Alphabet Focuses on Efficiency with New AI Chip
     • Google unveils new AI products at 2023 Cloud Next event
3. Microsoft (MSFT)
   • is developing a quantum machine using a proprietary control chip and a cryo-compute core that work together to maintain a stable cold environment
   • and offers a portfolio of quantum computers from other hardware providers as a service to provide an open development environment for researchers, businesses and developers that enables the flexibility to tune algorithms and explore today's quantum systems.
   • Read:
     • Microsoft straps AI to your back
     • A Bull Market Is Coming: 2 AI Growth Stocks That Brilliant Money Manager Ken Griffin Is Buying Hand Over Fist
     • Prediction: These Will Be the 3 Biggest AI Stocks in 2030
4. Baidu (BIDU)
   • has developed a quantum computer with a 10 qubit processor
   • and has developed a 36-qubit quantum chip.
   • Read:
     • Baidu, SenseTime Among First Firms to Win China AI Approval
     • Better Chinese Tech Stock: Alibaba vs. Baidu
     • China's Baidu makes AI chatbot Ernie Bot publicly available
5. IBM (IBM)
   • plans to develop a multichip processor that is 860% faster than its current fastest processor by 2025
   • and have its quantum computers commercialized within 5 years.
   • Read:
     • IBM Collaborates With Salesforce to Accelerate AI Adoption
     • IBM Unveils Enterprise-Focused Advanced AI Platform Watsonx
     • IBM's New Analogue Chip Boosts AI Energy Efficiency
6. Alibaba Group (BABA)
   • is investing heavily in quantum computing research
   • and building a quantum computing chip based on superconducting qubit technology.
   • Read:
     • Wall Street Bulls Look Optimistic About Alibaba: Should You Buy?
     • Alibaba and Other China Stocks Rise Again. Why Long-Term Gains May Be Harder
     • China leaps forward in the AI arms race as Alibaba releases a new chatbot that can ‘read’ images
7. Honeywell International (HON)
   • Honeywell Quantum Solutions and Cambridge Quantum have combined to form Quantinuum – the world’s largest integrated quantum computing company and offers the world's highest performing quantum computer and a full suite of quantum software, including the first and most advanced quantum operating system to support customer needs for improved computation in diverse areas including cyber security, drug discovery and delivery, material science, finance, and optimization across all major industrial markets.
   • The company will also focus on the advancement of natural language processing to fully leverage the possibilities of quantum AI.
   • Read:
     • Falling In Love With Honeywell Stock After Earnings
     • Honeywell Quantum Solutions And Cambridge Quantum Computing Combine To Form World's Largest, Most Advanced Quantum Business
8. Tesla (TSLA)
   • Tesla’s innovations in the field of AI is huge and has a cutting-edge AI team. Recently, Elon Musk claimed that Tesla is becoming known more as an AI and robotics company. 
   • Read:
     • Top Stock in Cathie Wood's Portfolio With Serious AI Upside
     • Tesla's $300 Million AI Cluster Is Going Live Today
     • Missed Out on Nvidia? 2 AI Stocks to Buy Now
9. Adobe (ADBE)
   • has launched Firefly - a collection of AI tools that enable users to generate content based on written or verbal prompts which, . when incorporated these into its existing creative software could fortify its economic defenses against competitors while simultaneously accelerating growth.
   • Read:
     • AI sector sees Nvidia surge, Tesla and Adobe emerge as potential investment options
     • Adobe's Results and Profit Guidance Beat Estimates on Demand for AI Products
     • Adobe's big AI push: How new products will boost profits

Investing In Quantum Computer Stocks

It is still too early to determine the best quantum computing stocks to invest in because the technology is rapidly advancing with several competing approaches so, rather than choosing a specific stock, investors might want to buy:

• the iShares Semiconductor ETF (SOXX), with 35 constituents and $0.35 in expenses which is UP 38.8% YTD (as of September 15th),
• the Invesco PHLX Semiconductor ETF (SOXQ) of 33 constituents and expenses of $0.19 which is UP 37.9% YTD) or
• the Defiance Quantum ETF  (QTUM) consists of 71 companies on the forefront of machine learning, quantum computing, cloud computing, and other transformative computing technologies thereby providing - albeit not quantum computing specific - diversified exposure. It is UP 28.6% YTD .

To take full advantage of what the future might well hold for AI quantum computing and related companies consider investing in one or more of the stocks highlighted in this article. Naturally, it is imperative that you do your own due diligence before making a decision to do so as my comments are not recommendations, per se. I hope this article has made you aware of the opportunities.

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