Google Quantum AI's Hartmut Neven (left) and Anthony Megrant examine a cryostat refrigerator for cooling quantum computing chips at Google's Quantum AI lab in Santa Barbara, California, the United States. — Reuters
INVESTORS in pure-play quantum computing stocks are grappling to value these futuristic companies, making prices highly volatile for the latest hot trend on Wall Street.
Rigetti, IonQ, D-Wave Quantum and Quantum Computing Inc are racing to turn quantum theory into machines that could crack problems beyond the scope of today’s computers, possibly assisted by artificial intelligence (AI).
This could revolutionise a wide range of fields from cryptography to drug discovery. Buzz around these companies has seen their shares soar by 100% or more this year alone.
“All of a sudden, it feels like science fiction has moved into the world of real technological possibility,” said Sylvia Jablonski, chief investment officer of Defiance exchange-traded funds, who oversees the Defiance Quantum fund.
Steve Sosnick, chief markets strategist at Interactive Brokers, questioned whether investors are getting carried away by the technological excitement.
“What is the right price to pay for a piece of the future?” said Sosnick, who has watched the share price of Rigetti Computing soar from US$1.06 a share to a recent high of US$58.
As of late October, it was the fourth most actively traded stock among his firm’s clients, with customers trading more Rigetti shares than those of Apple or Amazon.
Rigetti shares now hover at around US$38, more than 1,000 times the company’s sales. By comparison, shares of AI chipmaker Nvidia trade at about 50 times sales.
Still unprofitable
While Rigetti’s stock has soared, its operations remain unprofitable, its financial statements showed, although a change in the value of securities it owned produced a bottom line profit in the first quarter of 2025. Christopher Poch, chief executive officer of Promethium Advisors, who manages portfolios for ultra-wealthy clients and families, compared how investors were valuing such stocks to being “a magic act”.
“How else can you explain a company that has a US$13bil market capitalisation but only US$22mil in forecast revenues?”
LSEG earnings consensus forecasts anticipate that Rigetti will earn US$21.9mil in 2026.
While a clutch of stocks are involved in quantum computing, including IBM and technology giant Alphabet, traders have latched on to four names that have collectively been dubbed the “Quantum 4”, said Art Hogan, chief market strategist at B. Riley Wealth.
Spokespeople for Rigetti, IonQ and Quantum Computing did not return calls seeking comment on their valuations.
A spokesperson for D-Wave declined any comment on the company’s roller-coaster stock or its outlook.
Some analysts that cover the stocks still recommend them despite the valuation. David Williams, an analyst at Benchmark Equity Research, rates Rigetti as a “buy” and last month boosted his target on the stock to US$50 a share from US$20.
Nevertheless, he told Reuters, “the valuation on quantum names is more of an art than science.”
Rating cut
On Monday, B. Riley analyst Craig Ellis cut his rating on Rigetti to “neutral”, citing its “premium valuation” and concerns that the US government shutdowns could create revenue headwinds.
Still, Ellis boosted his price target on the stock to US$42 a share from US$35. On Tuesday, the stock traded at US$36.43 a share, down nearly 7%.
Banks and corporate America have shown interest in the trend.
Last month, JPMorgan Chase announced plans to invest up to US$10bil in strategically important sectors such as quantum computing.
In September, IBM and HSBC announced that they had used quantum-based technologies to develop a new algorithmic bond trading platform. Both ignited a fresh round of fervor, as did reports last week that the US government may also inject new funding into quantum computing in exchange for equity stakes.
A US Department of Commerce official told Reuters in an email that it is “not currently negotiating” such arrangements.
Still, while the quantum computing stocks have posted jaw-dropping gains and a McKinsey report projects the total value of the market could top US$100bil, the technology has taken only baby steps forward and even technology investing experts remain cautious.
“It’s the holy grail of computing; the use case is undeniable, and undeniably awesome,” said Rick Bradt, a portfolio manager at Neuberger Berman who invests in disruptive technologies. “But there’s still a lot of uncertainty about the timing.” — Reuters
Susan McGee writes for Reuters. The views expressed here are the writer’s own.
