Quantum Computing Stocks Collapse: Here’s Why
Quantum computing has been one of the hot trends of the past few months as stocks have doubled or more followed suit. The alphabetof (NASDAQ: GOOG) Willow announcement. Investors looking for any way to play the quantum computing space have driven Microchip’s stock into the stratosphere.
Then NVIDIA: (NASDAQ: NVDA) CEO Jensen Huang, who is well-respected in the tech industry, had some disparaging comments about the industry, according to the filing S&P Global Market Intelligence, IonQ: (NYSE: IONQ) fell 32.3% this week, Quantum Calculator (NASDAQ: QUBT) decreased by 48.7% and D-wave Quantum (NYSE: QBTS) decreased by 36.9%.
The stock drop came after Nvidia CEO Jensen Huang, in a Q&A with analysts at CES in Las Vegas, said the timeline could be 15 to 30 years before it becomes “very useful.” ” quantum computers. This is the relevant quote from Huang.
if you say 15 years is very helpful quantum computers that will probably be on the original side. If you say 30 is probably on the late side. But if you were to pick 20, I think a whole bunch of us would believe it.
To be clear, Huang didn’t say the quantum computer was a pipe dream. In fact, he said Nvidia is working with almost every quantum computing company in the world. But he thinks current expectations for near-term revenue growth may be overstated.
The announcement struck a chord with quantum computing fans, but it’s hard to argue against the idea that we’re years away from quantum computing being a meaningful business. Wave had less than $50 million in revenue over the past 12 months.
The fundamentals don’t support the valuation, which is not surprising for an early-stage technology.The question now is when it will become a real business.
One of those pushing back on Huang’s thoughts is IonQ CEO Peter Chapman, who said today: “We believe IonQ will be profitable as sales reach $1 billion by 2030.”
The $1 billion revenue target he “thinks” is achievable doesn’t disprove Huang’s thesis. It’s still a relatively small business, and IonQ trades at 7 times 2030 earnings if IonQ gets there. $1 billion in revenue, as the CEO hopes.
He also pointed out that the bigger problem is that big tech, including Nvidia, one of the industry leaders, has invested $50 billion in quantum technology during the year.
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