Nvidia CEO Jensen Huang made headlines in January, sowing skepticism toward the emerging field of quantum computing. His comments, which suggested the technology was still 15 to 20 years away from being commercially useful, were seen as a major disappointment to industry prospects, triggering a sharp sell-off in shares of several companies, such as D-Wave Quantum (QBTS +11.13%), IonQ (IONQ +11.82%), and Rigetti Computing (RGTI +12.40%), developing innovative quantum solutions.
However, at last month's Nvidia GPU Technology Conference during a "Quantum Day" event, Huang made an about-face on his prior doubts. Admitting he may have been misinformed, he pivoted to embrace what is seen as the next frontier in computing technology, announcing new investments into research. Leading industry companies were present, taking the opportunity to highlight their recent breakthroughs and game-changing potential.
Are quantum computing stocks a buy right now? Here's what you need to know.
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The NISQ era for quantum computers
Quantum computers are designed to tackle highly complex calculations in fields like machine learning, optimization, simulations, and cryptography, surpassing even the most advanced supercomputers, including those powered by Nvidia's high-performance GPUs.
Unlike classical computers that rely on binary logic, quantum computers use qubits, which can represent 0, 1, or both simultaneously in an additional dimension. Through superposition and entanglement, quantum systems unlock exponentially greater processing power for unique tasks, such as encryption, and for potentially next-generation artificial intelligence (AI) that mimics human thinking unbound by trained datasets.
NYSE: IONQ
Key Data Points
The technology is real and already present, with multiple companies pursuing diverse quantum architectures, each offering distinct advantages. IonQ, leveraging trapped-ion technology, generated $47 million in revenue in 2024 (for the period ended Dec. 31) with its quantum computing as-a-service (QCaaS) model on cloud platforms. While not currently profitable, the company is projecting to nearly double its revenue this year. Similarly, D-Wave Quantum last reported 135 customers exploring real-world applications with its quantum annealing approach. Its shares are up more than 220% over the past year at the time of writing.
On the other hand, despite this early commercial progress, the technology is recognized as still stuck in the Noisy Intermediate-Scale Quantum (NISQ) era. Current systems, while capable of achieving quantum solutions, face challenges in scaling qubits significantly while managing rising error rates, limiting them to niche or research applications since they are not yet able to outperform conventional hardware on a reliable basis. It's still early for the quantum computing industry, with the pure play companies in the segment still facing a long road ahead to prove their potential.
Long-term promise with near-term opportunities
Jensen Huang may have been at least half-right in downplaying the near-term significance of quantum computing, which thus far does not threaten Nvidia's semiconductor leadership. However, the story is far from over, with a breakthrough into the post-NISQ era -- defined by systems boasting hundreds of thousands of qubits and fault-tolerant error correction -- potentially arriving sooner rather than later.
Tech giants like Alphabet and Microsoft are advancing their quantum research and development, competing for a share of what experts estimate is a $170 billion market opportunity for quantum hardware and software providers projected by 2040. In February, Microsoft introduced its Majorana 1 quantum chip, featuring a novel approach to stabilizing qubits that it believes has accelerated the timeline for transformative commercial quantum applications. Even Nvidia could benefit from this shifting landscape, as its GPUs integrate with quantum chips within the same tech infrastructure.
Meanwhile, near-term growth opportunities for pure play quantum computing companies, such as Rigetti Computing, are notable for their still relatively small scale. Customers as early adopters across industries are investing heavily to stay ahead, underscoring the strategic importance of quantum development.
I'm cautiously bullish
Investors have multiple options in the stock market to tap into quantum computing -- from established tech giants to emerging disruptors. Beyond the recent extreme stock market volatility and concerns regarding the strength of the U.S. economy, there is confidence that quantum computing as a secular growth driver in technology is just getting started.
Following the deep sell-off in the broader sector, I see room to turn cautiously bullish and begin nibbling at some of these beaten-down disrupters. The companies that can manage to successfully monetize a superior platform will be well positioned to reward shareholders over the long run.
