Quantum computing stocks skyrocketed at the end of 2024. Pure-play stocks in this corner of the tech sector saw absolutely stellar price gains from Nov. 1 to Dec. 31. But the explosive returns turned into a rout in January:
|
Quantum Computing Stock |
November-December 2024 Price Gain |
Jan 2025 Price Drop |
Price Change From Oct. 31 to Jan. 31 |
|---|---|---|---|
|
IonQ (IONQ 2.51%) |
178% |
(3%) |
167% |
|
Rigetti Computing (RGTI 3.33%) |
1,060% |
(10%) |
939% |
|
D-Wave Quantum (QBTS 6.00%) |
693% |
(28%) |
467% |
|
Quantum Computing (QUBT 3.08%) |
1,380% |
(35%) |
864% |
Data source: YCharts.
These stocks have billion-dollar market caps today. Three months ago, only IonQ could make that claim. Market values ranged from $107 million for Quantum Computing to $253 million for Rigetti three months ago.
Are these hungry upstarts too hot to touch, or are they simply great investments after January's price correction?
Nvidia CEO Jensen Huang's reality check
The recent price drops stemmed an important statement from Nvidia (NVDA 1.89%) CEO Jensen Huang.
Under the main-stage lights of the CES technology conference, Huang said that quantum computers are a long way away from being useful in any real-world application.
"If you kind of said 15 years for very useful quantum computers, that would probably be on the early side," Huang said. "If you said 30, it's probably on the late side. But if you picked 20, I think a whole bunch of us would believe it."
That calm observation doused the hot gains of quantum computing stocks like a bucket of ice-cold water. Based on a recent technology breakthrough by Alphabet's (GOOG 1.71%) (GOOGL 1.82%) Google Quantum AI group, many investors expected quantum computing to become a useful technology very soon. Stretching that timeline from a couple of years to a couple of decades isn't quite as rewarding in the short term.
NYSE: IONQ
Key Data Points
The struggle is real and the road is long
With Huang's note in mind, you can't expect companies like IonQ or D-Wave to become cash-gushing industry giants anytime soon. Instead, the companies must find a way to develop money-making systems and services before running out of cash. That won't be easy in most cases.
Sector leader IonQ saw third-quarter revenue of $12.4 million, up from $6.1 million in the year-ago period. That's an impressive growth spurt, but still a very slim revenue stream. At the same time, the company faces massive expenses to keep the lights on and move its quantum research projects forward. IonQ's net loss in the third quarter was a staggering $54.5 million, up from $44.8 million. The company also reported negative free cash flows of $83.7 million over the past three quarters. IonQ finances its operations by digging into a $336 million stash of short-term investments.
The company can probably stay in business for a few years on that basis, and a couple of more by asking shareholders for more cash through open-market stock sales. Still, this is clearly an expensive business to run, and IonQ investors are making a big bet on the company's ability to deliver game-changing quantum computing systems someday.
I could do a similar rundown of the other three companies, but it wouldn't be fun to read. For example, Quantum Computing measures its quarterly revenue in thousands of dollars rather than millions, but it still faces million-dollar operating expenses. You get the drift.
NASDAQ: RGTI
Key Data Points
Best quantum stock to buy on the January dip? Try Nvidia.
One or more of these four quantum computing specialists might indeed stay relevant, successful, and solvent until their products can beat old-school digital computers in meaningful ways. IonQ is probably the safest bet, given its significantly larger scale and its ability to deliver a few experimental systems already.
But these technology specialists must compete against firmly established tech giants with much larger budgets. It was Google Quantum AI that delivered a promising error-correction breakthrough, not IonQ or Rigetti Computing. Other heavyweights include IBM (IBM 0.29%) and Microsoft (MSFT 0.20%), and Huang's comments carry weight because Nvidia also runs a quantum computing research lab.
So if you want to make an opportunistic investment in quantum computing right now, you should probably look at Nvidia's 18.6% price drop in January. That setback had nothing to do with quantum technology, but with the appearance of ultra-efficient artificial intelligence (AI) tools from DeepSeek.
But a discount is a discount, and Nvidia will probably make a bigger splash in the quantum computing industry than Rigetti, D-Wave, IonQ, and Quantum Computing combined. I don't recommend anything more than a speculative little investment in any of the pure quantum computing names in 2025.
