The artificial intelligence (AI) trend has demonstrated again how much investors can gain by monitoring the latest tech trends. While AI is hot right now, investing in quantum computing stocks may produce similar gains in the long run.
Quantum computing is a new technology that may become Wall Street's next favorite thing in a few years. This technology aims to solve certain types of extremely complex problems that classical computers can't. In theory, quantum computers will be able to simulate molecules to speed up drug discovery, help businesses make more optimal decisions, and accelerate AI training.
Some people believe that investing in quantum stocks now can turn them into millionaires. The industry is filled with potential, but there are some risks to consider, especially if you are thinking about making $5 million from quantum stocks in the next decade.
The pure-play companies are small
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Investors who are seeking stocks with the potential for major multibagger returns often start by looking at companies with smaller market caps. That's understandable. On an absolute basis, it requires far less sales and earnings growth to justify a $1 billion company growing into a $2 billion valuation than it does to turn a $1 trillion company into a $2 trillion company.
IonQ (IONQ 0.21%) has a market cap under $20 billion, while Rigetti Computing (RGTI +1.87%) and D-Wave Quantum (QBTS +0.34%) are valued at less than $10 billion.
NYSE: IONQ
Key Data Points
A handful of companies that are major players in the AI space today have market caps in excess of $1 trillion, and numerous others are worth more than $100 billion. If pure-play quantum computing stocks can achieve similar results, it's feasible that a portfolio of those stocks could generate $5 million in gains over the next 10 years, depending on how much you invest.
However, that's a big "if." Quantum computing is still an early-stage technology, and the companies involved are generating little revenue. For instance, IonQ has a $16 billion market cap, but it guided for a top line of $106 million to $110 million in 2025. That gives it a sky-high price-to-sales ratio of 145. Meanwhile, it's expecting to report a loss of $206 million to $216 million for the year. It will need to perform perfectly from here for many years just to justify its current valuation. Rigetti and D-Wave likewise have multibillion-dollar valuations but only bring in a few million dollars in revenues per quarter. Their current valuations are entirely speculative.
Pure-play quantum computing stocks are burning through cash
Not only do these companies have lofty price-to-sales valuations, but all three are burning through cash. IonQ reported a net loss of $1.05 billion in Q3 and just under $40 million in revenue. The other pure-plays fall into a similar pattern of net losses widely exceeding revenues. For now, they are relying on money raised from equity offerings just to stay in business, as well as investors' belief in the promise of quantum computing.
At some point, quantum computing technology appears likely to reach a level of maturity where it is both useful and commercially viable. That would give some of these growth stocks fundamental value that goes beyond hype. However, not every quantum computing pure-play is guaranteed to be a winner. Investing in a quantum computing ETF can give you exposure to the entire sector, so you have some of your money allocated toward whichever companies wind up the winners.
Among these pure-plays, the heavy cash burn will likely continue for at least a few more years before these companies start making profits. Meaningful commercialization of the technology is still years away. Optimistic forecasts suggest that quantum computing could be commercialized in 2030, but it could be longer before it's finally viable.
The longer it takes for quantum computing to become commercialized, the more likely it is that well-established tech companies with far deeper pockets will develop their own versions of the technology, cutting into the market share available to the pure plays.
Patiently monitor quantum computing stocks
At this point, investors shouldn't rush into quantum computing stocks. Yes, these stocks could rally and go on generational runs once their technology is commercialized. However, it could take multiple years for that to happen, and in the meantime, those pure-plays will continue to burn through cash. Moreover, at their current levels, many years' worth of highly optimistic future results are already baked into their share prices.
AI companies are making money right now. Not only are investors pouring capital into the industry, but the companies involved are generating tangible revenue and earnings growth.
Investors who believe in quantum computing's long-term potential could be right about it and still lose money by buying these stocks at the wrong time. Investors should monitor developments in quantum computing and keep an eye on the top contenders. It's too early to guess which ones will be the winners.
Current conditions in this sector are reminiscent of how matters stood in the space exploration industry in 2021.
Many optimistic investors piled into Virgin Galactic and other space stocks like AST SpaceMobile and RocketLab. Those stocks did well in 2021, but crashed hard the following year.
Those early investors were eventually proven right about AST SpaceMobile and RocketLab's long-term potential, but not every investor who bought shares in 2021 actually held on through the crash to benefit from the eventual recovery. And Virgin Galactic never did rebound. It's down by more than 99% from its peak.
Quantum computing stocks may face a similar situation where they crash at least one more time and stay low for a bit before becoming compelling buying opportunities. IonQ has had several collapses of more than 50% over the past five years, and two of those 50% drops took place in 2025. The stock is now down by about 40% from its all-time high.
Quantum computing technology may be innovative, but the pure-play stocks in the space are highly speculative. For now, it would be better to invest in other opportunities and wait for a better time to pounce on quantum computing.
