What goes up must come down. But what goes down can shoot right back up again -- especially when it receives a big boost from Microsoft (MSFT 1.57%).
This is what's happening on Wednesday, as quantum computing investors cheer some kind words from Microsoft's strategic missions and technologies chief, Mitra Azizirad, who last night urged quantum investors to get ready, because "we are right on the cusp of seeing quantum computers solve meaningful problems and capture new business value."
Seconding that emotion, shares of Rigetti Computing (RGTI +0.62%) shares exploded 25.6% higher through 10:25 a.m. ET this morning. IonQ (IONQ +0.09%) is also joining in the fun, up 26.9%, while D-Wave Quantum (QBTS 1.57%) gained 31.1%. Best of all is Quantum Computing (QUBT 1.82%), which rose an astounding 44% in the first hour of trading on the Nasdaq.
NYSE: IONQ
Key Data Points
Volatility, thy name is quantum
What a difference a week makes!
It was only last week, if you recall, that quantum computing stocks collapsed under the weight of negative comments from Nvidia (NVDA 1.56%) CEO Jensen Huang, who warned that it will probably be 20 years before quantum computers exist that are capable of doing anything "very useful" for customers. Meta Platforms (META 3.77%) CEO Mark Zuckerberg quickly piled on with negative comments of his own, and in no time flat, quantum stocks were in free fall, losing 50% and more of their respective market capitalizations in less than a week.
Now the quantum computing stock trade is reversing in a big way -- and no wonder. On her Microsoft blog last night, Azizirad declared 2025 "the year to become Quantum-ready." The Microsoft exec says that "the pace of quantum research and development is only going to accelerate [over] the next 12 months." And this means that -- whether or not it takes 20 years for quantum to become "very useful" to businesses -- from an investor's perspective, 2025 is going to be a year chock-full of positive PR over quantum's progress.
That alone should be very good news for quantum computing stocks' prices, regardless of what happens on these stocks' bottom lines.
Image source: Getty Images.
Caveats and provisos
But the more quantum stocks' prices divorce themselves from the companies' underlying fundamentals, the more overpriced they will become -- and the riskier they will become to invest in.
Consider: The four quantum stocks named above boast a combined market capitalization of some $12.6 billion after today's run-up. Not one of these companies is currently profitable, however. Indeed, if you add up all their revenues, the four of them combined generated less than $60 million in revenue over the last 12 months.
Result: Quantum computing stocks in total sell for a staggering 210 times their minuscule revenues.
Granted, some quantum stocks are worse than others. Quantum Computing, for example, may have been savvy enough to snag the phrase "quantum computing" for its name, but the $386,000 in revenue it accumulated over the last year means that, at nearly $1 billion in market cap, Quantum Computing stock sells for nearly 2,500 times sales. In contrast, IonQ, at $6.4 billion in market cap but with $37.5 million in trailing revenue, looks like a bargain at just 170 times sales.
(Note: 170 times sales is not a bargain in reality, only relative to the even more insanely expensive stocks we're comparing it to.)
NASDAQ: GOOG
Key Data Points
If you absolutely must invest in quantum, just buy Google
Long story short, if you feel you absolutely must invest in quantum, your best bet is probably just to buy the stock that started this quantum frenzy in the first place: Alphabet (GOOG 0.58%) (GOOGL 0.42%). Beyond owning the Willow quantum chip and being profitable, at a valuation of just 7 times sales, Alphabet is also by far the cheapest means of investing in quantum today.
