News
AI Stocks to Buy Instead of Betting on Quantum Computing
Source: finance.yahoo.com
Published on October 27, 2025
What Happened
Quantum computing, with its potential to revolutionize fields like medicine and cybersecurity, has captured the imagination of investors. Companies like IonQ are garnering attention, but the timeline for realizing quantum computing's true potential remains uncertain. For investors seeking more immediate opportunities, artificial intelligence presents a compelling alternative.
Why It Matters
While quantum computing holds long-term promise, AI is already transforming industries and delivering tangible results. Two companies poised to capitalize on this AI boom are Taiwan Semiconductor Manufacturing (TSMC) and Broadcom. These companies aren't just ideas; they are established players with proven track records and significant growth potential in the AI market. The delay of quantum computing's practical applications makes AI a more pragmatic investment for the near future.
Consider this: IonQ reported a $178 million net loss against just $21 million in sales recently. Investors are betting the farm on future potential. However, TSMC and Broadcom are capitalizing on AI now, with sales and earnings to show for it.
Taiwan Semiconductor: The AI Chip King
Taiwan Semiconductor (NYSE: TSM) stands as the manufacturing backbone behind almost all of the world's most advanced semiconductors, including those powering AI data centers. TSMC has spent decades perfecting its manufacturing processes, investing billions in cutting-edge equipment, and securing roughly 90% of the advanced processor market. This dedication has allowed TSMC to surpass competitors such as Samsung and Intel.
Recent results underscore TSMC's strength: Q3 revenue jumped 30% to $33.1 billion, while earnings climbed 39% to $2.92 per American depositary receipt (ADR). TSMC's CEO, C.C. Wei, emphasized the company's confidence in its AI prospects, stating, "We are still very comfortable that the demand for leading edge semiconductor is real." Furthermore, with a price-to-earnings ratio of 31.5, TSMC's stock is reasonably priced compared to the tech sector's average of 47.
Broadcom: An AI Accelerator Powerhouse
Broadcom (NASDAQ: AVGO) is a leading designer of application-specific integrated circuits (ASICs) vital for AI and cloud computing. Broadcom's expertise has made it the go-to choice for many AI companies. OpenAI, creator of ChatGPT, recently announced a partnership with Broadcom for 10 gigawatts of AI accelerators by 2029. This collaboration will involve Broadcom co-developing AI accelerators and deploying AI server racks and networking systems.
The deal with OpenAI could translate into billions of dollars in revenue for Broadcom, according to the Wall Street Journal. The timing couldn't be better, as Broadcom's AI revenue is already experiencing rapid growth. Management forecasts annual AI revenue reaching $90 billion by 2027—a 650% surge from 2024. Broadcom's established position as a key supplier positions them ideally for continued growth.
Our Take
IonQ's quantum computing ambitions are admirable, but the company's current financial performance suggests a risky investment. Investors may find greater stability and growth potential in established AI players like Taiwan Semiconductor and Broadcom. Both companies are already generating significant sales and earnings, solidifying their positions in the expanding AI market. Ultimately, these two companies offer more grounded investments with significant potential to benefit from their current AI efforts in the coming years.
The Bottom Line
Focusing on companies already deeply entrenched in the AI revolution, such as Taiwan Semiconductor and Broadcom, presents a more immediate and potentially rewarding investment strategy. While quantum computing may eventually transform industries, AI is already delivering results, making it a more sensible choice for investors seeking near-term growth.