Key Takeaways:
Northland Capital Markets initiated coverage on a slate of quantum computing stocks Monday, setting an Outperform rating and a $55 price target on IonQ (IONQ), suggesting a 14 percent upside from its closing price of $48.32.
Of the publicly traded pure-plays, analyst Nehal Chokshi believes IonQ is the most likely to achieve broad quantum advantage by 2030. Chokshi also initiated coverage on newly-listed Xanadu Quantum Technologies (XNDU) with an Outperform rating and a $43 price target.
The new ratings position IonQ and Xanadu as Northland’s top picks in the sector. The firm also rated Quantum Computing (QUBT) at Outperform, while assigning Market Perform ratings to rivals Rigetti Computing (RGTI) and D-Wave Quantum (QBTS).
The bullish calls come as investor enthusiasm for quantum computing intensifies, focusing on which companies can first demonstrate systems that outperform classical computers on a commercial scale. Chokshi highlighted IonQ’s technical progress, noting it is one of a few companies to surpass the 99.9 percent two-qubit gate fidelity threshold, a key measure of calculation accuracy.
Chokshi sees a compelling growth narrative for Xanadu, which went public less than a month ago. The company is a leader in photonic quantum computing, which uses light particles to process information and can operate at room temperature, unlike superconducting systems from Google and IBM that require extreme cooling.
While photonic technology is seen as easier to scale, it faces challenges with "photonic loss," where photons can disappear or be absorbed, creating errors. Xanadu’s approach, however, uses a type of qubit with built-in error correction, which the analyst views favorably.
In contrast, Chokshi assigned Market Perform ratings to D-Wave and Rigetti, who both went public in 2022. He expects the companies "will have their niches" but sees a more limited opportunity for D-Wave, a leader in quantum annealing systems best suited for optimization tasks.
Chokshi believes D-Wave’s market will be constrained "if recent movement into gate based quantum computing proves too late." The company had previously abandoned gate-based models to focus on annealing but re-entered the race in 2021.
The new ratings draw a clear line between the companies Northland sees as potential leaders and those it views as niche players. The focus now shifts to which firms can translate technical milestones into scalable, error-corrected quantum computers. Investors will be watching for further fidelity improvements and the demonstration of logical qubits, the next key step toward commercial viability.
This article is for informational purposes only and does not constitute investment advice.
