Investing

Stock Market Today: Nasdaq Composite Falls & Quantum Computing Stocks Collapse (RGTI, IONQ, QUBT)

Eric Bleeker

Published: January 8, 2025 11:09 am

Last Updated: January 8, 2025 4:02 pm

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As of 10:25 a.m. ET, stocks are largely in the red today. An interest rate-fueled sell-off began yesterday that pushed the Nasdaq Composite down nearly 2%.

Today, the Nasdaq isn’t down quite as much, but ‘risk’ assets and stocks with recent momentum continue to be under pressure. Let’s take a look at where major markets are at in early morning trading:

• Dow Jones Industrial Average: Down 152.84 (-.36%)
• S&P 500: Down 19.71 (-.33%)
• Nasdaq Composite: Down 70.71 (-.36%)
• Russell 2000: Down 36.43 (-1.63%)

As you can see, the small cap heavy Russell 2000 is the biggest loser among indexes today as investors rotate out of smaller stocks that have more exposure to rising interest rates.

Let’s check in on today’s biggest market stories.

Quantum Computing Stocks in Free Fall

No corner of the market has seen stronger gains in the past three months than quantum computing stocks. Companies tied to quantum computing have seen their stocks rise by as much as 20-fold since early October.

What’s been driving the enthusiasm? A press release from Google that they’d made a breakthrough in error correction (a key obstacle to making quantum computers viable) sparked significant interest in the space.

Yet, any time stocks run this amount, there’s a good chance of a severe correction. We’ve discussed the eye-watering valuations of quantum computing stocks several times on the 24/7 Wall St. podcast, for example.

Yesterday at a Q&A session at CES, NVIDIA CEO Jensen Huang addressed quantum computing, and his answer is having a disastrous impact on stocks in the space today:

“Quantum Computing can’t solve every problem. It’s good at small data, big compute, big combinatorial computing problems. It’s not good at large data problems. 

It’s good for small data problems. And the reason for that is because the way you communicate with quantum computer is microwaves. And terabytes of data is not a thing for them. 

And so just working backwards, there are some very, very interesting problems that you could use quantum computers for. Truly generating a random number, cryptography. These are problems that are small data, big compute. And working backwards, we’re a computing company. We’re an accelerated computing company. And as you know, we work with CPUs. We obviously built Grace. 

We’re not offended by anything around us and we just want to build computers that solve problems that normal computers can’t.

And so in the case of quantum computing, it turns out that you need a classical computer to do error correction with the quantum computer. And that classical computer better be the fastest computer that humanity can build, and that happens to be us. 

And so we are the perfect company to be the classical part of classical-quantum. And so we are working with just about every quantum computing company in the world is working with us now. And they’re working with us in two ways. 

One, the quantum-classical we call it CUDA-Q. So we’re extending CUDA to quantum. 

And they use us for simulating the algorithms, simulating the architecture, creating the architecture itself, and developing algorithms that we can use someday. 

And when is that someday? We’re probably somewhere between – in terms of number of qubits, order of 5 orders of magnitude or 6 orders of magnitude away. 

And so if you kind of said 15 years for very useful quantum computers, that’d probably on on the early side. If you said 30 is probably on the late side. But if you picked 20, I think a whole bunch of us would believe it. 

But what we’re interested in is we want to help the industry get there as fast as possible and to create the computer of the future and will be a very significant part of it.” 

We’ve added emphasis to the part of Jensen’s quote that is being analyzed the most.

Here’s a collection of quantum computing stocks and their performance today:

• Rigetti Computing (Nasdaq: RGTI): Down 48.3%
• Quantum Computing Inc (Nasdaq: QUBT): Down 48.1%
• IONQ (NYSE: IONQ): Down 45.4%
• D-Wave Quantum (NYSE: QBTS): Down 47.6%

What’s interesting about Huang’s quote is that an assessment that quantum computing is 15 to 20 years from ‘very useful’ applications isn’t outside consensus.

In their press release about Willow, Google stated advancement in error correction had been a 30-year process and was step two on a six-part roadmap to get to large error-corrected quantum computers.

At the end of the day, even after today’s drop IONQ is still up 278% in the past six months. Qaunum Computing Inc. is still up 1,524% in the same time frame.

These stocks had accelerated at a dizzying pace off significant retail interest. That rarely continues forward without a major correction – especially in an industry that’s a significant timeframe away from material revenues.