Uncle Sam Just Invested $2B in Quantum. These 3 Stocks Could Be the Next NVDA.

The US government just did something it almost never does. It put $2 billion directly into nine companies in one of the most futuristic industries on Earth, quantum computing. And the stocks exploded. Some jumped over 30% in one single day. And people are calling this the next Intel moment. So, let's get into it. So, let me explain exactly what happened because this is kind of a big deal. The US Department of Commerce signed letters of intent to invest $2 billion into nine quantum computing companies. And here's the part that's unusual. The government is not just handing out grants. They are taking actual ownership stakes in these companies. Small, non-controlling stakes, but real ownership. Before the current administration, that almost never happened. Historically, the US government avoids owning pieces of private businesses. The rare exceptions were during emergencies like the bailouts of GM and AIG during the 2008 financial crisis. But this is a little bit different. This is the government choosing to become a part owner in a brand new technology because they believe it's critical to national security and to America's future. We saw them buy parts of Intel, which has surged from a low of $17 to over $120 per share in about one year. Dell has boomed since announcements that President Trump himself had purchased shares. Service Now jumped from the mid 80s to as high as $140 last week at one point after hours on similar news. You've probably heard of the Buffett effect. Stocks jumping on news of Birkshshire taking position. It was so big for Birkshshire in fact that they went directly to the SEC and said, "Can we get a delay in when we report our ownership because people jump on board too quickly and it affects our ability to buy?" Well, now there's the Trump effect. Stocks skyrocketing sometimes over 100% as the US government announces a strategic position. Guys, this past weekend I was at a christening and a first communion and my wife's nephew is about 38, 39 years old. He said something the effect of, "I just basically buy whatever Trump buys." And he was being 100% serious about it. Now, here's where the money's going. IBM received the biggest piece, a $1 billion investment to build what would be America's first pure play quantum foundry. IBM is also putting $1 billion of its own money to match it. Global Foundaries, which is a chipmaker, got 375 million. And then a group of smaller companies including D-Wave, Regetti, Inflection, Atom Computing, Side Quantum, and Quantum each received around $100 million. The market reaction was explosive. D-Wave jumped 35%. Inflection jumped 31%. Regetti jumped 30%. IBM rose over 12%. And even quantum companies that did not get any government money shot up just because they were in the same industry. Over the past 30 days, some of these names are up 40, 45, and even 100%. The excitement is real. Now, let me explain what quantum computing actually is because you cannot judge whether this is a good investment if you don't understand what these companies are trying to build. Think about the computer or phone you're using right now. It processes information using bits. A bit is like a light switch. It can either be on or off, a one or a zero. Every photo, every video, every app on your device is built from billions of these simple on or off switches all working together. Quantum computers work completely different. Instead of bits, they use something called quibbits. And here is the strange almost magical part. A quibbit can be both on and off at the same time, a one and a zero simultaneously. like having your light switch on and off at the same time. It's even hard for us to comprehend. But because of this, a quantum computer can explore an enormous number of possibilities all at once instead of one at a time. That means certain problems that would take a normal computer thousands of years could be solved by a quantum computer in minutes or hours. To give you a sense of the scale, Google claims this quantum chip called Willow solved a math problem that would take a regular computer 10 septillion years. That's 10 followed by 24 zeros. A number so large it's basically impossible to imagine. Google's Willow chip completed that exact same calculation in under five minutes. Guys, 10 to the 24th power of zeros. 10 followed by 24 zeros versus 5 minutes. If quantum computing the works the way these companies hope, it could transform medicine, energy, cyber security, and national defense. But this is important. Quibbits are extremely fragile and incredibly hard to control. The technology is still in its very early infancy. There are major obstacles before quantum computers become practical for everyday use. But imagine how amazing they'll be when they are useful. And guys, if this is not an amazing story, what is? But as we always say, the fifth tenant of our principal driven investing, a great story becomes a bad investment if you pay the wrong price. So why is everyone saying this could create the next Intel stock? Well, let me explain because there is a real story behind it. Not long ago, the government took an ownership stake in Intel, the American chip company. A lot of people were skeptical at the time, but Intel was considered critical to national security because America needed to make its own advanced chips instead of depending on factories overseas. After the government stepped in and backed Intel, the stock absolutely took off. Investors who saw the bigger picture did very well and speculators who guess correct did very, very well. This term, the government has been in increasingly willing to put taxpayer money directly into companies it considers strategically important using the authority created by the Chips and Science Act. The idea is simple. Instead of just giving companies grants and letting the founders and venture capitalists capture all the upside, the government takes an ownership stake so taxpayers can benefit as well if the company succeeds. And by being an owner, the government can also help prevent these critical companies from being sold to foreign buyers. There's also a competition angle here that makes this urgent. China has reportedly already invested around $15 billion into quantum technology and has named it one of the its top priority future industries. So part of why the US government's moving now is to make sure America wins this race and doesn't fall behind. When you combine government money, national security importance, and a global race against China, you can see why investors are so excited and why Intel comparison is being thrown around. Now, guys, a couple things to mention here. I own Intel. I got a lot of my shares taken away around $80 from covered calls. I'm fine with that. Zero FOMO. So, let me give you a sense of the size of this opportunity because the numbers are genuinely staggering. And this is the part that gets investors most excited. Estimates suggest that quantum computing could create somewhere between$1 trillion and three trillion dollars in economic value by 2035. IBM itself estimates the quantum industry could generate up to 850 billion in economic value by 2040. And total public funding for quantum announced around the world has now passed $50 billion. But here's the catch I really want you to hear. The economic value and the actual revenue these companies make today are two very different things. Listen to this. While the long-term economic value is measured in trillions, the actual global quantum computing revenue is estimated to grow to just 3 to four billion by 2028. That's billion with a B, not trillion. And much of that is years away. So you have a massive gap. Enormous future potential, very little revenue today. And that gap between the exciting future and the small present is exactly where investors get themselves into trouble. Which brings me to the most important part of this video. So out of all these quantum names, which one would I even consider running through our process, IBM? And the reason is simple. IBM is the only one on the list that's a real profitable established business that you can actually value. For those of you who don't know, this is what IBM is. They're one of the oldest technology companies in the world. They make money from enterprise software, consulting, cloud computing, and helping huge corporations and governments run their technology. This is a real business, real revenue, real profits, and it's been around for over a hundred years. Guys, that was correct. They've been around since 1911. The quantum piece is just one part of a much larger company that was considered a dinosaur just a few short years ago. That is what makes IBM different from a tiny pure play quantum stock. If you buy Regetti or D-Wave, you're buying almost pure speculation on quantum. These companies live or die on a dream. If you buy IBM, you're buying a profitable business that happens to also be a leader in quantum. The quantum upside is a bonus on top of a real valuable company, not the pure reason the stock exists. But and this is the whole point of today even with IBM the question is never just is this a good company the question is always is this a good company at a good price. So let's run it through our process and find out whether IBM makes sense at today's price or whether the quantum excitement has pushed it too far. Okay guys, so here's IBM. We have a $291 billion market cap. That's the actual price of the company, not the share price. As you notice, I haven't brought up share price yet because that doesn't matter. What matters is what's the market cap. Now, I then go to enterprise value. The enterprise value is essentially if you bought the entire company and also paid off all its debt. So, it's the true value of buying a business with no debt. That's $400 billion. So, it's $110 billion more than the market cap. So, essentially, there's $110 billion of debt when you net all the cash out. guys, they generated 12.5 billion in free cash flow last year and 11 billion a year over the last 5 years. So they basically have 8 to 10 times their debt levels, their free cash flow levels in debt. That's a lot. If you guys know, my goal is to be under five. So even on the on the 5year average free cash flow, we're talking about 10 times free cash flow in terms of their debt levels. That is a lot. It is IBM, but it is a lot to consider because look at it this way. If they're hundred billion dollars in debt, if the rate goes up 2%, that's $2 billion. You might sit there and say, "Well, they can afford that." Yeah, but it takes away 20% of their free cash flow. Now, returns on capital aren't great, and I don't like that for such an old company. If it's a newer company that's getting acclimated, building up. I can understand that. This is an old company. So, what this means is they don't really do a good job of getting a return on the money that's invested in their business. That means it's harder for them to compound. That means they have to spend more money to get gains and profit. You don't like that. You want a company that's able to invest money and get really high returns on their money. That's the sign of a good company. So, we'll bring that up later. Now, it's selling for 23 times free cash flow, which you might sit there and say, well, hey, that's way cheaper than in like no cash flow. I get that. But for a company with low returns on capital, you don't want to pay a premium for them. If the market average is 15 to 16, why are you paying a 50% premium for a low return company? Now, one thing also I want to point out that kind of worries me, their profit margin very consistent over the last 5 and 10 years of 10 or 11% all of a sudden jumped up to 15. You might sit there and say, "Paul, why does that worry you?" Because I always wonder, is this a fluke? because right now their PE is 27, but it's based on 50% higher than normal profit. So, is it really 27 or is it a fluke that it's that low? That's the question I have to ask. They've done $20 billion in acquisitions, which is not a ton for a company this size over the last 5 years. But look at their revenue growth. That was 6.3% a year even with the acquisitions. All right, so that's a kind of a high level. Oh, by the way, they also pay a massive dividend. So 6.28 billion. It gives you a 2% dividend yield, but it eats up a lot of their cash flow. Just remember that going forward. Now, let's look at the eight pillars here. That is ugly. High price of free cash flow and PE, low returns on capital, shares outstanding are actually up. So, they're diluting shareholders just a little bit. Cash flow is down over the last five years. Net income and revenue are up, and they have high debt levels. Let's go and see if their cash flow is down though because their capex is higher. Okay, capex is a little bit higher. But the funny part is it's not it's actually not. 10 years ago was 13 billion. Last year it was 12.4 billion. Yes, it's higher from four or five years ago, but it's not higher from 10 years ago. So, I don't like that very much. Now, guys, I've gone a lot through a lot of numbers here. It could feel overwhelming, especially if you're a new viewer. Do not worry about that. You're not alone. Everybody in the history of the world who's a successful investor today was overwhelmed at some point. We are here to simplify all of this for you. And the best way I can do that is to give you access to all this information. I have an absolutely free PDF that explains all of our key metrics, how to calculate them, what they mean. That way you can have it at your fingertips to learn and so we're speaking the same language. And extra added bonuses, you'll probably be a lot smarter than your friends just by studying and understanding the PDF. So, click the link in the description below or in our first pin comment and we will email you the PDF absolutely for free in a matter of minutes. This is exactly why I teach on YouTube. I realize there's a disconnect between story and price and understanding very basic numbers. These are not overly complicated numbers. Trust me when I say if you put in a few minutes of effort every day, you will be way better at this in just a few months. So, let's go to analyst estimates here and see what they think. Well, what's interesting here is analysts think that there's a lot of upside here in the next four years on their earnings per share going from 1255 to$,570 per share. That's actually a lot more than I would expected. And the revenue growth mid single digits, not a grower, growing from 72 billion to 107 billion. That's what you expect for a really large company. But what's funny is kind of goes against this whole quantum computing kind of idea. This idea that quantum computers going to change and they're doing amazing. So maybe analysts aren't even factoring in the quantum computing aspect of all of this. So guys, we have a story, we have some numbers. I always tell people the next step is go to our stock analyzer tool, see if it's worth any more time to be spent because the end of the day, we want to figure out is this within the realm of possibility that I can even buy it at the current price. So, I'm doing a 10-year analysis. Here are my assumptions for revenue growth. Two, four, and 6% over the next 10 years. Not not huge, not low. Profit margin 9, 10, and 12. What's interesting is their free cash flow is considerably higher than their profit margin over the last 5 10 years. So I'm going to focus a little bit on that. I put 15, 17.5, and 20. Next, what PE and price to free cash flow would I put 10 years from now? Guys, average returns on capital. Very big business. It's going to be hard for them to move the needle. I put 13, 16, and 19. I basically kept it at the market average. Can you give it a premium? I can understand that a little bit of a premium, but if you if you go above 20 for your middle assumptions, I would personally disagree with that. But of course, you could see something that I don't see. And then finally, guys, 9% no margin of safety, my intrinsic value return. What is this company worth? Now, remember, I'm not buying this for a 9% return. I can get that from a lowcost ETF. So, for you out there, I personally put in way higher numbers. Why? because I want to have myself give myself a reason to buy an individual stock. So, you can see I made some pretty reasonable assumptions here on IBM and this is something that you guys can easily learn to do with our stock analyzer tool and it'll help you save hours of research and this is why you need this. What you just watched me do took about 3 minutes and that's with me explaining things to you. But it told me more about IBM as an investment than most people will ever know before they buy it. Most investors would have just looked at the price, read a headline or two, and made a decision based on that. That's how you buy a stock, and then feel sick to your stomach when it dropped because you don't know what to do next. You never really understand what it's worth. The stock analyzer tool and the rest of our software helps change that completely. You put in smart, logical assumptions about a company's growth and cash flow. Exactly what you just watched me do right here. And it shows you the price where you actually get the return that you are looking for. It's not a guess. It's a number that means something. People who use these tools greatly decrease the number of emotional decisions they make. Not just buying, but also selling too early. They stop buying on hype and hoping for the best. They stop selling on fear. They understand what they buy. They know what they own and they know why they paid what they paid. That's what it feels like to sleep well at night knowing that no matter what the market's doing, you've made a sound investment. And the price goes lower because you understood this, you're going to sit there and probably buy more as everybody else is freaking out. And here's the thing, you just saw how simple this was. If I can do it live in a few minutes here, you can do it very easily. You don't need a finance degree. We have thousands of users who use this software every single day for a reason. Do you think they're all brilliant PhDs? Of course not. So, here's what I want you to do right now. I want you to think to yourself, what's that peace of mind worth to you? What are these tools worth to you to be able to make smarter decisions every day and feel confident? Is it worth a dollar a day? Guess what? That's our 7-day trial. It's seven bucks. And if you click the link below to get full access, you'll see why over 70% of the people who sign up for our 7-day trial end up signing up for the year. Run whatever stock you've been thinking about. And before you spend a single dollar on it, you'll see what the numbers actually tell you. So guys, I hit the analyze button and for the first time, I'm going to tell you the stock price is 306. So hit the analyze button. Here's what we got. We got a low price of 90 to 140, high price of 190 to 320, middle price of 130 to 217. And the reason there's such big differences is one is based on profit, one's based on free cash flow. Guys, based on free cash flow. If my middle assumptions occur, I'm gonna get about a four and a half percent return, including the dividend. So, for me, unless I'm making egregiously high assumptions on that on these levels that I'm not willing to make, it's a pass for Marie right now. And guys, I want to remind everybody, don't take our titles literally. The titles have probably changed a dozen times since you clicked, since we put it out and you clicked on it. And we use it as a way to grab your attention and then teach a lesson. So, here's the lesson. Everything I told you so far is the exciting part. The government money, Intel's comparison with 10x the stock price, the trillion dollar future, the race against China. And if you only watch the first half of this video, you might be tempted to go buy every quantum stock you can find. Please don't do that blindly. And please don't do that just because I'm going to enter some skepticism. Let me explain why. There's a big difference between a great technology, which is a great story, and a great investment. They are not the same thing. The internet was a worldchanging technology. It did far better and far more world changing than we even thought back when it came out. But investors who bought internet stocks at any price in 1999 got absolutely demolished when the dot bubble burst. Even probably if you factor in the great success that Amazon has had. The internet changed everything. Our lives are all 180 degree difference because of the internet. They were right about the technology and still lost a huge chunk of money. Why? Because they paid the wrong price for a story that ended up being far better than we even thought. Guys, I'm not going to lie to you. Every major technology probably did far better than we even thought. Because when we're thinking about the future potential, we're thinking about it from a world that exists today, not a world that exists years from now. If you told me in 1999 that somebody on the internet could go sign up and instead of taking a taxi, they would just call what's called an Uber, they would come to your house and take you somewhere. And that Uber was some average Joe sitting there trying to make a hundred grand a year. That would have seemed insane. I have a renter yesterday who needed a new trash can. In a matter of 2 and 1/2 hours, they had a brand new trash can from Lowe's delivered to their door. Guys, you know how crazy that is? 10 years ago, I tried to get a local grocery chain named Heinens's, a very high-end grocery chain, to deliver groceries to my tenants in my apartment buildings. You know what they said to me? Ain't going to happen. What's going on now? You can get any groceries, anything ordered and at your door while you're at work so it's waiting for you when you get home. Guys, when my wife's out of town and I want dinner, I leave my office. I order something from my office door, by the time I get home, it's waiting for me at my steps. I did not think that was possible 25, 26 years ago because that was not the world we existed and we lived in back then. So imagine what quantum computing will do for us once our world progresses to the point of understanding what that does. So here is the rule that matters far more than any government announcement. The price you pay determines your future return. The companies and the investments don't care what price you pay. They're still going to do what they're going to do. They're going to generate whatever cash flow they're going to generate. So, what you pay determines that return. A great company, the perfect company at a at the wrong price will end up being a bad investment. Quantum computing will genuinely change the future. But if you pay a price today that already assumes 20, 30, 40 years of perfect success, you can be completely right about quantum and still lose massive amounts of money. And here's what really concerns me about most of these pure play quantum stocks. Many of them have basically no revenue. They're definitely not profitable. Their stock prices are based entirely on a dream of what might happen 20 10 or 20 years from now. Even Nvidia CEO Jensen Hayang said the practical useful version of quantum computing is likely two decades away. Two decades, guys, not gonna lie to you, he's probably wrong on that one. And a senior analyst at Morning Star warned that if you're expecting a near-term return from a hot quantum stock, that is not reality. And that investors should tread very carefully with pure play quantum names. When a stock has gone up 100% in a month based on excitement with little to no revenue or earnings behind it, that's not investing, guys. That is pure speculation. Never mix the two together. Guys, quantum computing is real. The technology has worldchanging potential. The government putting $2 billion behind it for a lot of people is meaningful. But my personal opinion is I hate it. I don't want the government making investments in company. The reason being is they're going to support companies no matter what because they want to support their investment. They want to support their agenda as opposed to who's the best. Let the best win. I am absolutely opposed to all government investing in private enterprise because it gives them a bias that I don't think they should have. It should be the best companies win no matter what. Guys, I want the best creator of quantum computing to win. That's how we get a better world in the future, not the one that has a biased take on it, which would be US government driven. If the US government owns part of these companies and somebody internationally makes a great quantum computing product that would help us out in the US, the government would block that. That is not where we want to be. We want to be better. Sometimes that means other places get better too. That's okay. But guys, excitement is not a strategy. Right now, most of these quantum stocks have run up enormously on hype on these government headlines and dreams of a future that could take decades to come. These pure play names have little to no earnings to support their prices. Now, I'm not telling you to avoid it. If you want to put a small amount of money on your own valition, I I'm not here to tell you no. What I'm here to tell you is just remember it is your money. It is your decision. I'm here to just show you what I believe about this world. For me personally, I don't make those bets. But it doesn't mean you shouldn't. It just means for me I look at it going I'd rather buy companies I understand and love at the right price and watch them compound for a long time. That is pure investment. So if you want actual exposure to quantum in a more sensible way, the question you have to ask is if the price today justifies the investment. That's it. Because the price you pay today determines your your return forever. That will not change. The second you've paid that price, your returns are locked in. Now guys, there is one more stock that you need to see. It's one that I think could be a bigger opportunity in the market right now. Click this video right here to watch it.