Over the last three years, the rise of artificial intelligence (AI) has been the primary catalyst driving Wall Street's major stock indexes to record highs. But in 2025, it's taken a back seat to a technology that's produced truly jaw-dropping gains.
Over the trailing year, as of the closing bell on Nov. 19, quantum computing pure-play stocks IonQ (IONQ +1.73%), Rigetti Computing (RGTI +3.46%), D-Wave Quantum (QBTS 0.49%), and Quantum Computing Inc. (QUBT 0.68%) have delivered respective returns of 90%, 1,860%, 1,530%, and 385%. For comparison, the technology-driven Nasdaq Composite has rallied 20% over the trailing year.
Gains of this magnitude imply that investor hype surrounding quantum computing is tangible and may not fade anytime soon. While there are viable reasons to be excited about the real-world applications of Wall Street's hottest innovation, the biggest risk of all to this quartet of quantum computing stocks has gone virtually undetected by the investing populace.
Image source: Getty Images.
Why did quantum computing stocks go parabolic in 2025?
In simple terms, quantum computing involves the use of specialized computers that can make rapid, simultaneous calculations at a considerably faster pace than the world's quickest supercomputers. Quantum computers are capable of tackling complex problems that classical computers are ill-equipped to handle.
One example of the real-world utility of quantum computers is their ability to speed up the real-time processing and learning capabilities of AI algorithms. Split-second decision-making is particularly important for AI software and systems.
Investors have also been enamored with the high ceiling for quantum computing hardware and services. Boston Consulting Group estimates this technology can add $450 billion to $850 billion to the global economy by 2040. Meanwhile, online publication The Quantum Insider is looking for this worldwide economic impact to reach the $1 trillion plateau by 2035.
NYSE: IONQ
Key Data Points
But if there's one tangible factor that's really lit a fire under the shares of IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing Inc. in recent months, it's the prospect of brand-name collaborations.
For instance, "Magnificent Seven" members Amazon and Microsoft (MSFT 1.48%) are both giving their respective quantum-cloud service subscribers access to IonQ's and Rigetti's quantum computers. Amazon's Braket and Microsoft's Azure Quantum can allow clients to run simulations and test their quantum computing hardware.
Additionally, quantum computing pure-play stocks soared following an Oct. 13 announcement from banking giant JPMorgan Chase that it plans to make direct equity and venture capital investments in 27 "sub-areas." Quantum computing was one of these 27 investment targets identified by JPMorgan's initial research.
Although everything would seem to be going swimmingly for quantum computing pure-play stocks, their parabolic ascent may prove fleeting.
Image source: Getty Images.
This under-the-radar risk threatens to wipe out the first-mover advantage of pure-play stocks
History tells us there are several reasons to be skeptical of the supercharged returns for IonQ, Rigetti, D-Wave, and Quantum Computing Inc.
To begin with, every hyped technology and game-changing innovation since the arrival of the internet in the mid-1990s has eventually navigated its way through a bubble-bursting event. Put another way, investors have consistently overestimated how quickly an innovation or trend would earn widespread adoption, gain utility, and/or be optimized. This eventually leads to lofty investor expectations not being met.
Quantum computing is still in the very early stages of commercialization, which exposes it to a high risk of a bubble-bursting event.
Furthermore, quantum computing stock valuations are otherworldly. Whereas price-to-sales (P/S) ratios above 30 in market-leading businesses have historically alerted investors to potential stock market bubbles, the forward-year P/S ratios for IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing Inc. are many multiples above this historical mark.
But there's an even bigger risk to these four quantum computing stocks that virtually everyone is missing. Namely, some of their leading clients could become their top competitors in the years to come.
NASDAQ: GOOGL
Key Data Points
With the exception of electric-vehicle maker Tesla, whose operating cash flow has fluctuated in recent quarters, the other six members of the Magnificent Seven are flush with capital and generating more cash flow from their operating activities than they often know what to do with. When a game-changing innovation emerges with an eye-popping addressable market, companies like Amazon, Microsoft, and Alphabet (GOOGL +3.50%)(GOOG +3.26%) seize the opportunity.
In December 2024, Alphabet introduced the world to Willow, the company's latest quantum processing unit (QPU). Last month (October), Alphabet reported that Willow oversaw calculations that were approximately 13,000 times faster than the fastest classical supercomputers on the planet.
Meanwhile, in February, Microsoft announced the arrival of Majorana 1, which is its take on a QPU. Microsoft claims that Majorana 1 is designed to scale to 1 million qubits, which is expected to significantly minimize errors while ensuring calculations that are considerably faster than those of classical computers.
The point being that we're already observing some of Wall Street's most influential, profitable, and cash-rich businesses encroaching on an industry where the first-mover advantage for IonQ, Rigetti, D-Wave, and Quantum Computing Inc. may be precarious, at best. Although IonQ recently completed a $2 billion equity offering, the funding situation for most pure-play quantum computing stocks remains uncertain. Trying to compete against the likes of Alphabet or Microsoft with no foundational operating segment and ongoing cash outflows is a recipe for disaster.
While several headwinds exist for quantum computing pure-play stocks, internal competition from members of the Magnificent Seven represents the most significant risk to their success -- and perhaps even their survival.
