Quantum computing is a nascent technology that creates multidimensional spaces with immense potential across various sectors. Quantum computers are built to solve problems faster than conventional computers. Such capabilities could impact businesses' approaches to simulating chemical interactions, optimizing logistics, and sorting through massive datasets. The global quantum computing market size is expected to reach $1.52 billion by 2027, growing at a 36.5% CAGR.
Due to massive investments by the public and private sectors, quantum computing has delivered exciting breakthroughs over the past year. And earlier this month, the U.S. government signed a joint statement regarding quantum information science and technology with Sweden and Finland to collaborate on advancing quantum technology research and development. Many sectors have benefited from quantum computing to create simulation modeling, large-scale data analytics, forecasting, and encryption systems.
Given this backdrop, we think investing in quantum computing stocks Teradata Corporation (TDC), Micron Technology, Inc. (MU), and Hewlett Packard Enterprise Company (HPE) could generate significant returns in the near term.
Teradata Corporation (TDC)
TDC is a provider of the connected multi-cloud data platform for enterprise analytics. Its Teradata Vantage platform, which is designed to run across on-premises, private, and public cloud environments, allows customers to integrate and simplify their data and analytics ecosystem. The San Diego, Calif-based company serves various industries through its seven geographic segments: North America; Latin America; Europe; Japan; the Middle East; Africa, and the Asia Pacific.
On February 10, TDC announced that its 1,000 node test could operationalize complex analytics at scale in the cloud. This should allow the company to continue to meet the demands of analytics technology and services.
On February 9, TDC entered an accelerated share repurchase agreement to repurchase $250 million worth of its common stock. Such share repurchases should boost shareholder returns significantly. And on January 18, TDC announced the cloud migration of Telefónica España's on-premises data analytics ecosystem to Vantage. This should enable TDC to leverage Telefónica in achieving its analytical goals.
During the fourth quarter, which ended Dec. 31, 2021, TDC's recurring revenue increased 5% year-over-year to $ 364 million. Its non-GAAP operating income rose 34% from its year-ago value to $90 million. The company's non-GAAP net income increased 52% year-over-year to $64 million, while its non-GAAP EPS grew 50% from the prior-year quarter to $0.57.
Analysts expect TDC's EPS and revenue to increase 19.6% and 5%, respectively, year-over-year to $2.28 and $2.03 billion in its fiscal 2023 (ending Dec. 31, 2023). The company has an impressive earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained 14.4% in price over the past year to close yesterday's trading session at $45.30.
TDC's strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which translates to Buy in our proprietary rating system. TDC also has an A grade for Value and Quality. The stock is ranked #12 of 81 stocks in the Technology – Services industry.
In addition to the POWR Ratings grades I have just highlighted, one can see the TDC ratings for Growth, Stability, Sentiment, and Momentum here.
Micron Technology, Inc. (MU)
MU is a provider of memory and storage solutions globally. The Boise, Idaho, company operates through four segments: Its Compute and Networking Business Unit; Mobile Business Unit; Storage Business Uni; and Embedded Business Unit. Its memory and storage technologies portfolio includes dynamic random-access memory (DRAM), negative-AND (NAND), 3D XPoint memory, and NOR under two brands, Micron and Crucial.
On April 12, MU announced the production of its new 16Gb GDDR6X memory, which features twice the capacity and up to a 15% higher performance than the previous 8Gb version. The additional capabilities support up to 24Gb/s, perfect for gaming and content creation. And on March 22, the company partnered with Idaho Power to construct a 40MW solar project. This project should accelerate the advancement of solar-powered renewable energy and help the company achieve its sustainability goals.
MU's non-GAAP revenue increased 24.9% year-over-year to $7.79 billion in its fiscal fourth quarter, ended March 3, 2022. Its non-GAAP operating income increased 118.8% from the year-ago value to $2.75 billion, while its non-GAAP net income grew 116.7% year-over-year to $2.44 billion. MU's non-GAAP EPS rose 118.4% from the prior-year quarter to $2.14.
The $2.46 consensus EPS estimate for its fiscal third quarter (ending May 31, 2022) represents a 31.1% improvement year-over-year. The $8.71 billion consensus revenue estimate for the current quarter represents a 17.3% increase from the same period last year. It surpassed the consensus EPS estimates in each of the trailing four quarters.
Shares of MU have risen 5.8% in price over the past six months.
MU has an overall A rating, which translates to a Strong Buy in our proprietary rating system. It is no surprise that MU has an A grade for Value and a B grade for Growth, Sentiment, and Quality. Also, it is ranked #5 of 96 stocks in the A-rated Semiconductor & Wireless Chip industry.
In addition to the POWR Ratings grades I have just highlighted, one can see the MU ratings for Momentum and Stability here.
Click here to checkout our Semiconductor Industry Report for 2022
Hewlett Packard Enterprise Company (HPE)
HPE is an edge-to-cloud platform-as-a-service company in Palo Alto, Calif. The company operates through six segments: Compute; High-Performance Computing & Mission-Critical Solutions (HPC & MCS); Storage; Intelligent Edge; Financial Services; and Corporate Investments and Other segments.
On April 11, Ituran selected HPE Alletra 9000 to improve real-time data access for its clients. The company uses HPE's data services to support telemetry data analysis and improve business operations.
On April 5, Auckland Transport adopted HPE GreenLake for advanced analytics to promote public safety. HPE's unified, cost-effective solution allows Auckland Transport to enhance productivity and automation.
In its fiscal first quarter (ended Jan. 31, 2021), HPE's net revenue increased 1.9% year-over-year to $6.96 billion. Its earnings from operations increased 101.8% from the year-ago value to $448 million, while its non-GAAP net earnings grew 2.7% year-over-year to $697 million. The company's non-GAAP EPS came in at $0.53, representing a 1.9% year-over-year improvement.
For its fiscal third quarter (ending July 31, 2022), HPE's EPS and revenue are expected to increase 10.9% and 4.1%, respectively, year-over-year to $0.52 and $7.18 billion. The company has an excellent earnings surprise history; it surpassed the consensus EPS estimates in each of the trailing four quarters.
The stock has gained marginally over the past six months to the last trading session at $15.71.
The company has an overall B rating, which translates to Buy in our proprietary rating system. HPE has a B grade for Value. The stock is ranked #9 of 54 stocks in the Technology - Communication/Networking industry.
Click here to see the other ratings of HPE for Growth, Momentum, Stability, Sentiment, and Quality.
TDC shares were trading at $45.65 per share on Tuesday afternoon, up $0.35 (+0.77%). Year-to-date, TDC has gained 7.49%, versus a -6.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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