The last week has been a breakout week for quantum computing stocks. In the last five days…
IonQ (IONQ) is up 9%...
D-Wave Quantum (QBTS) is up 74%...
Rigetti Computing (RGTI) is up 78%...
Quantum Computing Inc. (QUBT) is up 109%...
And Quantum Corp. (QMCO) is up 523%.
Before we get too far into the weeds, it should be noted that those companies are not yet profitable, although part of Quantum Corp.’s outsized performance can be chalked up to an earnings release that showed they’d achieved (adjusted, so take it with a grain of salt) EBITDA breakeven.
They’re also on the smaller side, with IonQ being the largest of the group ($6.8 billion market cap) and Quantum Corp. the smallest ($37 million market cap), while the other two names are both right around $600 million.
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In other words, a little bit of positive news for the industry can go a long way.
Why Are Quantum Computing Stocks on the Move?
The big catalyst for all those names was the announcement by Amazon Web Services (AWS) of a new Quantum Embark program to onboard customers into the quantum computing space. Quoting from the release:
With Amazon Braket, the quantum computing service of AWS, experienced customers can already reduce their technology risk by getting one-stop-shop access to a range of diverse quantum hardware on a pay-as-you-go basis. Now, through the new Quantum Embark program, we are adding advisory services that provide more context, guidance, and expertise to help customers who are just starting their quantum journey.
The Embark program breaks down into three silos: Use Case Discovery, Technical Enablement, and Deep Dive.
The silos leverage multi-day workshops to 1) identify business use cases for quantum computing, 2) learn about and experience the technical side of quantum computing, and 3) match hardware and assess results for targeted applications.
In the announcement, Amazon quotes testimonials from Westpac and Vanguard, both of whom position Embark as helping to guide their long-term thinking around the use of quantum computing rather than as something that’s going to prompt immediate and significant investment.
That’s really the key point at this stage—nobody is quite sure if, when, or how quantum computing will become a value-add.
As you can probably imagine, quantum computing is a complex topic (although this quantum computing primer from Intel is a good place to start if you’re interested in learning a bit more) and beyond the scope of this article.
But, suffice it to say, right now companies see a fair amount of potential in it, but they don’t yet know how it will play out.
So, we’re still in the early innings.
That said, IonQ believes quantum computing will be a $65 billion (total addressable market) opportunity by 2030, rising to $850 billion by 2040.
The segments they highlight include machine learning, logistics, autonomous vehicles, financial services, chemistry, pharma, encryption and more. (You can see the breakdown in IonQ’s investor presentation.)
Investing in Quantum Computing Stocks
So, can (and should) we invest in quantum computing stocks now?
Honestly, picking winners at this stage seems premature. Even Google doesn’t know how quantum computing will be useful yet.
One option would be to take small positions in a number of companies in the space, with the assumption that most of them will be a total loss (or close to it) while the outperformance of the remainder (over the next decade-plus) will make up for those losses.
Alternatively, you could consider investing in an ETF like the Defiance Quantum ETF (QUTM), which has holdings in IONQ, RGTI, and QBTS, as well as more mainstream computing names like Nvidia (NVDA), Qualcomm (QCOM), and Microsoft (MSFT).
Although despite the performance cited at the top of this article, QUTM is up only 5% in the last week.
A better option is to add names to your watchlist to keep tabs on progress in the sector. The technical hurdles in building a viable large-scale quantum system are so high that IonQ isn’t guiding for a 1,024-qubit system until 2028. (That’s the minimum level at which experts expect it could become a threat to existing security protocols, which is the most “obvious” application out there today.)
Quantum computing isn’t going to explode out of nowhere the way large language models and generative AI did, so investors shouldn’t expect any Nvidia-like performance for quantum computing stocks in the immediate future.
But the possibilities are there for major disruption to computing, and there will be some massive winners in the space as we get closer to the end of the decade.
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