Quantum computing stocks had an incredible 2025. IonQ, Rigetti Computing, and D-Wave Quantum delivered the kind of returns that make investors who missed out feel queasy.
But for all the hype, there's something quantum bulls don't love to admit: The "smart money" isn't convinced. Wall Street's exposure to the pure-play quantum computing stocks that dominate Reddit threads and YouTube thumbnails is limited.
Most institutional buying in quantum pure plays isn't what it looks like
Yes, institutional investment in the sector rose dramatically last year, but most of that capital flowed in from passive exchange-traded fund (ETF) and index fund managers, not active hedge funds. When you see that BlackRock "owns" 30 million shares of IonQ, it's easy to misunderstand this as implying BlackRock likes the stock. It doesn't.
Instead, it reflects mechanical buying driven by IonQ's inclusion in an index like the Russell 2000.
This passive buying is responsible for the vast majority of Wall Street activity in quantum pure plays, but even the active side of things is misleading. Most of these are hedge funds that trade on momentum, looking to take advantage of short-term trends. They're not buying with conviction and holding for the long term.
It's easy to see why.
Image source: Getty Images.
The numbers don't lie
Rigetti posted $1.95 million in revenue last quarter. IonQ is growing faster, but still reported an adjusted loss of nearly $49 million in its most recent quarter. Both companies have had to raise massive amounts of capital -- IonQ through a $2 billion equity offering, Rigetti through a $350 million raise -- just to extend their runways. Every dollar comes with shareholder dilution attached.
These are companies hoping quantum computing can reach commercial viability in a few years' time. There is a very good chance that this technology could take much longer to mature -- decades, even. In fact, there's still a question of whether real, viable quantum computing will ever be possible outside of a lab.
Wall Street's real quantum bet is hiding in plain sight
So where is Wall Street actually putting its money? It may not be as exciting as the pure plays, but the answer is hiding in plain sight: Alphabet (GOOG 1.34%) (GOOGL 1.43%) -- parent company of Google.
And just to be clear, Wall Street isn't buying it because of quantum computing, but they love that quantum is one more reason among many to believe that Alphabet is a long-term wealth builder.
When you buy IonQ, you're betting everything on quantum working, and within a reasonably short time frame. When you buy Alphabet, you're getting a dominant, diversified business that also happens to be a leader in the quantum race.
NASDAQ: GOOGL
Key Data Points
Alphabet can afford to wait -- its competitors can't
The quantum industry has a habit of overpromising on timelines, and investors should be appropriately skeptical. Real-world quantum computing applications, the kind that generate the sort of revenue that would justify the sky-high market capitalizations of Rigetti and its peers, could be a decade or more away.
And Alphabet doesn't need quantum to work anytime soon -- that's the key difference. The company generated more than $73 billion in free cash flow last year. Its R&D budget alone is bigger than the combined market capitalizations of all the pure plays combined. IonQ, Rigetti, and D-Wave all have to worry about their very survival if the technology is further off than they claim. Alphabet can patiently wait, however long it takes.
Wall Street loves Alphabet because it is a cash machine that dominates the current tech landscape and has shown a remarkable ability to innovate over the years, often at the forefront of technological change.
The worst-case scenario is that you own one of the most profitable businesses in history. The best case is that you also own the company that defines quantum computing's commercial future, whenever it arrives.
