:max_bytes(150000):strip_icc()/GettyImages-2243507324-7cbefce365cc4ea691757f1b418c1979.jpg "Here’s How Hot Quantum Stocks Have Been Lately—And What to Know About Them")
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Key Takeaways
- Quantum computing stocks have rallied even more dramatically than AI stocks in the past year as investors increased their bets on the technology.
- Technological breakthroughs from tech giants like Google have increased quantum’s visibility and potentially expedited the technology’s commercialization.
- Still, the stocks are susceptible to dramatic swings driven by the slightest shifts in sentiment.
Move over, AI.
Quantum computing stocks—those representing a technology that teases vast computing power—have soared in the past year, making even the artificial-intelligence rally look tame. Shares of D-Wave Quantum (QBTS) and Rigetti Computing (RGTI) have soared 2,700% and 3,100%, respectively, over that period. Quantum Computing (QUBT) is up 1,100%. IonQ (IONQ), up 250%, is the laggard of the bunch.
Only a few of Wall Street’s favorite AI stocks have posted comparable gains in the past 12 months. Software companies Palantir (PLTR) and Applovin (APP), lauded for their AI-driven growth, have risen roughly 300% in the past year. Nvidia (NVDA), the poster child of the AI boom, has gained about 44%.
Rallies typically slow with age, so it’s understandable that the fresher theme has more momentum behind it—particularly at a time when investors have been willing to lean into speculative concepts and companies. But compare quantum stocks over the past year and AI stocks in the year after ChatGPT was released, and quantum still dramatically outpaces AI: Nvidia shares rose 206% in the 12 months starting Nov. 30, 2022, while server maker Super Micro Computer (SMCI) soared 212%.
Why This Is Important
Everyday investors often fear they’re missing out when they see asset prices skyrocketing the way quantum computing stocks have. That fear can drive investors to make risky bets on poorly understood stocks that they panic sell at a loss when the rally hits a rough patch.
Granted, Wall Street didn’t immediately grasp how significant ChatGPT would be for Nvidia, and the chipmaker’s stock gains accelerated in 2023. But even in the yearlong period that Nvidia rose the fastest—between March 2023 and March 2024—its approximately 300% return still pales in comparison to most quantum stocks in the last 12 months.
What’s Driving the Quantum Craze?
A string of technological breakthroughs and Big Tech investments has raised quantum computing’s visibility on Wall Street over the past year.
Last December, Google (GOOG) unveiled Willow, a quantum chip that it claims can solve a problem in 5 minutes that would take the world’s fastest supercomputer 10 septillion years to complete. (That’s 714 trillion times the estimated age of the universe.) Microsoft (MSFT) debuted its own quantum chip in February, and Nvidia last month unveiled hardware designed specifically to connect quantum computers and the accelerated computing chips that power AI.
As with the early days of the AI rally, quantum investors are betting the nascent technology will have profound implications for the economy and business. Quantum computing is expected to drive advancements in drug discovery, advanced manufacturing, cybersecurity, financial modeling, and logistics, to name just a few of its possible commercial applications.
Due to the speculative nature of quantum investments, the stocks swing dramatically on the slightest shift in sentiment. Shares of Rigetti plummeted 45% one day in January when Nvidia CEO Jensen Huang said he believed a “very useful” quantum computer was still about 20 years out.
Quantum stocks, despite their recent run-up, are relatively small compared with AI darlings. The four aforementioned companies have market capitalizations ranging from $2.5 billion (D-Wave Quantum) to $18.5 billion (IonQ)—valuations that are by no means small, but which are dwarfed by Nvidia’s $5 trillion market cap.
Another factor driving the stocks higher in recent months: the Trump administration’s hands-on approach to public-private partnerships. The Wall Street Journal recently reported the White House was in talks to invest in several quantum computing companies. The Trump administration, which has struck similar deals with chipmaker Intel (INTC) and rare earths miners, denied the reports, but that didn’t stop quantum stocks from soaring.
What’s the Path To Commercialization?
Huang’s 20-year quantum timeline may be one of the most pessimistic forecasts out there, but the technology does face hurdles to commercialization. Quantum computers are too error-prone to achieve “quantum advantage”—the point at which a quantum computer can solve a real-world problem faster than a classical computer—according to a recent Bank of America report.
Last month, IonQ announced it had achieved fidelity—a measure of computational accuracy—of 99.99%, a record for quantum computers that essentially means the computer would make one mistake for every 10,000 computations. But the binary computers we use today boast much higher fidelity, making a mistake in one out of every 10 quintillion computations, according to BofA. To achieve “quantum advantage,” BofA estimates quantum will need to reach fidelity of 99.9999%.
And it may be difficult to integrate quantum computers with existing digital infrastructure like data centers and software, according to BofA.
Nonetheless, consulting firm McKinsey estimates the quantum computing market could reach $97 billion by 2035, and nearly $200 billion by 2040. And monetization by leading technology companies may not be that far off: Bank of America analysts in a note last month said they expect quantum computing to have a material impact on computing pioneer IBM’s (IBM) results by 2030.
