Investing

Quantum Computing Stocks Roar Back to Life. Time to Buy?

Rich Duprey

Published: January 15, 2025 12:47 pm

Last Updated: January 15, 2025 1:02 pm

After being pummeled to losses of 50% to 60% in the span of just a few days, quantum computing stocks surged higher on Tuesday with Rigetti Computing (NASDAQ:RGTI) rocketing 48% higher.

Despite several tech CEOs saying the technology is still years away from practicality, maybe decades, not everyone is convinced. Microsoft (NASDAQ:MSFT) wrote on its blog that 2025 was “the year to become quantum ready.” Coupled with several analyst upgrades to the sector and quantum computing stocks were off to the races.

While Rigetti was the frontrunner, D-Wave Quantum (NASDAQ:QBTS) soared 23%, Quantum Computing (NASDAQ:QUBT) surged 14%, and IonQ (NASDAQ:IONQ) was up 6%. All four stocks were up another 20% in morning trading Wednesday, too.

Have the reports of quantum computing’s death been greatly exaggerated? Is now the time to get back into these stocks?

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A tectonic shift in outlook

After a dramatic run-up in value in 2024, where some quantum computing stocks rose over 1,000% as investors sought to equate spending on artificial intelligence with this next-generation computing technology, comments by Nvidia (NASDAQ:NVDA) CEO Jensen Huang threw a bucket of cold water on the party. 

“If you kind of said 15 years for very useful quantum computers,” he told CES 2025 last week, “that would probably be on the early side. If you said 30 it’s probably on the late side. If you picked 20, I think a whole bunch of us would believe it.”

Quantum computing stocks crashed the next day. That was followed by Meta Platforms (NASDAQ:META) CEO Mark Zuckerberg saying on the Joe Rogan Podcast on Monday that while he wasn’t an expert in the field, he felt quantum computing was “still quite a ways off from being a very useful paradigm.”

The one-two punch from the tech CEOs gutted the sector, with most quantum computing stocks losing half their market valuation or more. But with Microsoft’s upbeat comments and analysts raising their price targets, is the tide turning?

Reevaluating quantum computing’s position

Microsoft’s president and COO of strategic missions and technologies Mitra Azizirad wrote “we are right on the cusp of seeing quantum computers solve meaningful problems and capture new business value.” She also announced the tech company’s new Quantum Ready program that will help companies prepare from the quantum computing revolution.

Analysts also quickly moved to bolster the bloodied sector. B. Riley analyst Craig Ellis raised his price target on D-Wave stock to $9 from $4.50 per share on Tuesday while maintaining a Buy rating. He also raised his target price on Rigetti to $8 from $4 per share.

Benchmark analyst David Williams also reiterated a $8 per share price target and Buy rating for D-Wave, while Goldman Sachs analyst Toshiya Hari nearly doubled his price target on IonQ after Huang’s comments wrecked the sector. He increased the one-year outlook from from $16 to $30 per share.

CEOs also came out in defense of their companies. IonQ CEO Peter Chapman told Barron’s his company was “already providing insight to customers today,” a view echoed by D-Wave’s CEO Alan Baratz, who said “Commercial quantum computing is already here — we’re already seeing customers solve useful problems with our quantum computing technology.”

A quantum leap of faith

There have been strides made in quantum computing technology, foremost among them is International Business Machines (NYSE:IBM), while Alphabet‘s (NASDAQ:GOOG)(NASDAQ:GOOGL) Google recently made a breakthrough with its Willow chip. However, most of the sector is comprised of small, largely underfunded stocks that generate little revenue and a loss-producing operations.

In an interview with Yahoo!Finance executive editor Brian Sozzi, Rigetti Computing CEO Subodh Kulkarni said his quantum computing company is at least three to five years away from being profitable. It might have to raise more capital, too, to keep funding its research into quantum chips.

While quantum computing stocks are roaring back following a multi-day rout of their shares, it’s probably not a sector worth the risk. The volatility exhibited over just the past few days shows just how far over their skis their valuations got that relatively offhand comments cratered their stocks. They will also face an uphill battle against the bigger, better financed stocks also exploring the space.

Quantum computing’s future may not be as far into the future as Huang or Zuckerberg think, but it is also not here today. With much more downside risk than upside opportunity, investors should avoid quantum computing stocks until there is more clarity.