Today's dip in shares for quantum computing companies, particularly Rigetti Computing, Quantum Computing, and D-Wave Computing, sparked intrigue.
Quantum computing stocks took a tumble on Wednesday, as investor excitement about the sector's future seemingly came crashing down. For over a month, valuations in this nascent space had been soaring, reaching new heights following Alphabet's unveiling of the Willow quantum computing chip. This groundbreaking chip surpassed previous benchmarks, performing calculations in minutes that would have taken standard supercomputers billions of years.
However, a simple comment from Nvidia CEO Jensen Huang sent shockwaves through the sector. During a Q&A session at CES in Las Vegas, Huang suggested that practical, fault-tolerant quantum computers might still be decades away. His estimation placed the realistic timeline between 15 and 30 years, with 20 years being the most likely scenario.
Unsurprisingly, the market reacted swiftly, with stocks in companies such as Rigetti Computing, Quantum Computing, and D-Wave Quantum plummeting. Rigetti Computing dropped by 41%, Quantum Computing saw a 40% decline, and D-Wave Quantum sank by 30%.
It's important to note that Huang is widely regarded as a technology and AI visionary. His company's graphics processing units and superchips are fueling the growth of new generative AI applications, and the demand for these components has been insatiable as cloud infrastructure providers and others build out hardware platforms to support this expanding sector.
Huang's comments were noteworthy due to his influence in the industry. Quantum computing stocks had surged following Alphabet's Willow announcement, and much of this growth was fueled by hype and optimism. With minimal revenues and small balance sheets, these companies were largely viewed as bets on quantum computing's future potential.
Rigetti Computing, for instance, had surged by nearly 2,000% in the year leading up to the sell-off, despite generating only $2.4 million in revenue in the third quarter. Its operating expenses for the same period were $18.6 million. On the other hand, Quantum Computing reported just $101,000 in revenue, with operating expenses of $5.4 million.
The backlash against quantum computing stocks highlights the risks of investing in early-stage technologies that are yet to prove their commercial viability. For investors considering these stocks, Huang's cautious remarks serve as a reminder that near-term breakthroughs are unlikely, and these stocks are best avoided until quantum computing develops a significant monetizable opportunity. However exhilarating they may be, the volatility of these stocks underscores the importance of taking a measured, long-term approach to investing in this sector.
The tumble in quantum computing stocks was largely influenced by the comments made by Nvidia CEO Jensen Huang, who suggested that fault-tolerant quantum computers might not be practical for several decades. This led to a significant decline in the valuations of companies like Rigetti Computing, Quantum Computing, and D-Wave Quantum. Investing in quantum computing stocks, which had been surging due to hype and optimism, was viewed as a bet on the future potential of the technology, given its limited revenues and small balance sheets. Despite the volatility of these stocks, a measured, long-term approach should be considered, as near-term breakthroughs are unlikely until quantum computing develops a significant monetizable opportunity.
