In recent years, investors and entrepreneurs have been abuzz with talk about quantum computing stock. Quantum computers might be capable of breaking encryption, solving physics, and many other processes classical computers can’t. The quantum computing stocks that can monetize this business could be set for big gains.

The most popular potential application for quantum computers is Shor’s algorithm. This algorithm can factor a number into its constituent primes faster than any classical computer. Because factoring numbers into primes underpins much of modern encryption, Shor’s algorithm could break modern encryption standards.

But Shor’s algorithm and other such applications will first need a working quantum computer to process on. That problem remains key and many companies are working on completely different methods for making a quantum computer. They’re even using completely different qubits, which are as fundamental to quantum computers as bits are to classical computers. Whether one method becomes the standard, or many methods can work side by side, will be crucial to the future of quantum computers.

Ultimately, investing in quantum computers requires an appreciation of the science, the possibilities, and the finances of quantum computing stocks. So here are three quantum computing stocks you’ll want to watch out for.

IonQ (IONQ)

A company called IonQ (NASDAQ:IONQ) recently came out with a new quantum computer with a capacity of up to 32 qubits. That may sound low, less than a fraction the size of their competitor’s computers. But IonQ wants to network its computers together, providing a modular, scalable platform of any potential size. The result should be a system that can outperform even the largest competing computers.

IonQ’s computers use trapped ions for its qubits, making them more stable than the alternatives. All quantum computers struggle with decoherence, wherein the stable quantum system falls apart and all information is lost. IonQ hopes its qubits will be more resistant to decoherence than its’ competitors, as even a large computer is useless if the information in it is too transient.

IonQ is expected to release earnings March 30, 2023, so investors should mark their calendars. In Q3 2022, IonQ reported $57 million in cash and $348 million in short term investments. They also had revenue of $3 million and a $25 million loss from operations. If its short term investments are stable, then it should have plenty of runway for the medium term. But it will need to grow revenue if it wants to stay around longer.

While IonQ is not the largest player in quantum computers, it does perhaps have the most potential. Its small, stable, scalable design could overtake its much larger competitors. And that makes it a stock any growth-focused investor will want to watch out for.

Arqit Quantum (ARQQ)

The most promising application of quantum computing is cracking modern encryption using Shor’s algorithm- but that won’t mean the end of encryption altogether. Arqit Quantum (NASDAQ:ARQQ) is a company selling the promise of quantum encryption. Even if Shor’s algorithm gets implemented, Arqit hopes it can help privacy remain viable.

Arqit claims its QuantumCloud is unbreakable and, backed by the power of quantum mechanics, is supposed to be safe from Shor’s Algorithm. It should also prove safe from classical attacks, meaning there’s still reason to buy it, even if viable quantum computers are a long way off.

Quantum encryption may seem like a small market, since quantum computers themselves remain in their infancy. But the market could grow quickly if quantum computers become more useful. Expect the market for quantum encryption to explode if Shor’s algorithm ever gets implemented at scale.

Arqit’s financials as of December 2022 show $20 million in revenue, and a loss of $52 million. They had cash on hand of $49 million, and recently announced they were selling $20 million of stock and warrants. And they may have to again so shareholders should be on the lookout for future dilutions.

At the moment, Arqit is still competing with classical encryption methods, and against much larger and deeper pocketed companies. A bet on them is a bet that quantum computing is set to take off soon- Or that an appreciation of their stronger encryption technology will drive adoption.

International Business Machines (IBM)

International Business Machines (NYSE:IBM) has positioned itself as the front-runner of the quantum computing race. With its’ latest machine able to use 433 qubits, IBM clearly holds the crown of having the largest quantum computer so far. But IBM still has a long way to go before reaching the mass market.

IBM’s lead in the quantum computing race should not be understated. In 2016, IBM opened up the IBM Cloud as the first publicly available and codable quantum computer. In 2019, it made its first commercially available quantum computer, which has become the most widely used system to date. It now hopes to unveil a 1000 qubit quantum computer this year, a milestone leagues ahead of its competitors.

But an investor must also appreciate how quantum computing is just a small part of IBM as a company, and that its stock may largely move independently of its quantum computing progress. It may fall even if it hits its quantum goals, or rise even if it misses them. Furthermore IBM’s quantum dominance still hasn’t given it the ability to perform many of the feats that it has hyped for years. It still has not produced a logical qubit that is resistant to decoherence, for instance.

IBM is the big, safe play for quantum computing investors. Even if its quantum dominance stalls, it will still be a good company to fall back on. But its current dominance does make it attractive if you think there can only be one big winner.

On the date of publication, John Blankenhorn did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.