Quantum Stocks Soar Amid Hype and Uncertainty Around Computing Breakthrough
Quantum stocks tied to Rigetti Computing Inc. and D-Wave Quantum Inc. have surged more than 1,900% in the past year on expectations that the technology they are building will become the next major computing breakthrough, according to Bloomberg. Both companies are now valued above $10 billion each, despite currently producing only a small fraction of the revenue generated by traditional firms of similar size.
Their machines remain in development stages, with most uses still experimental. Both firms are burning cash while generating limited commercial income. Bloomberg notes that these companies are worth more than Campbell’s Soup, even though they make less than 1% of its revenue. This trading frenzy has transformed one of the most experimental areas of advanced computing into a heated battleground for investors.
### The Promise of Quantum Computing
Supporters of quantum technology insist that if it eventually works at scale, it could solve problems that classical machines cannot. Quantum computers are designed to perform calculations in parallel, rather than one at a time, potentially making them far more powerful than traditional systems.
Some investors believe this technology will one day help design new drugs, model complex climate systems, and handle data workloads that overwhelm today’s best hardware. Troy Jensen from Cantor Fitzgerald told Bloomberg, “If it works, it’s going to be huge and explosive. If not, it could go to zero.”
The trade has been compared to early biotechnology investing, where investors may wait years for progress that may or may not materialize. The uncertainty is significant. Many researchers and executives acknowledge the potential is huge, but the timeline remains unclear. Earlier this year, Nvidia chief Jensen Huang said meaningful results could still be decades away.
### Political and Corporate Momentum
Despite the uncertain timeline, political and corporate interests have not slowed down. The Trump administration named quantum computing development as a strategic priority. Fidelity International recently participated in a financing round for Quantinuum, valuing the startup at $10 billion. Google has also reported progress; last year, the company stated that a chip it developed completed a task in five minutes that would have taken a supercomputer 10 septillion years.
Traders who observed AI-related stocks rise sharply over the past two years have moved quickly, aiming to position themselves ahead of another wave of technology adoption. Haim Israel from Bank of America Merrill Lynch noted, “Capital markets don’t want to miss this moment.” On Oct. 22, Alphabet’s shares rose when research suggesting new advances in its Willow processor briefly added $30 billion in market value.
### Skeptics Point to Valuations and Risks
Meanwhile, skeptics highlight lofty valuations and downside risks. Bruce Cox of the Harrington Alpha Fund is betting against Rigetti Computing, saying, “There are no earnings, nothing to go on. The froth is crazy.” The recent pullback supports his view, as both Rigetti and D-Wave Quantum have crashed more than 34% from last month’s highs, wiping out about $12 billion combined, according to Yahoo Finance.
Financial comparisons reveal how stretched these valuations are. Rigetti, based in Berkeley, is expected to make around $20 million in the next four quarters, mostly from development contracts and component sales. At current prices, the stock trades at more than 500 times projected revenue. In contrast, Palantir trades at 72 times forward revenue, and the Nasdaq 100 trades at under six times.
For Rigetti to be valued similarly to Nvidia, which trades at 17 times forward sales, its annual revenue would need to exceed $600 million. Analysts, however, expect about $40 million in revenue by 2027.
### Analyst Perspectives Remain Mostly Positive
Despite these concerns, analysts remain mostly bullish. Six of seven analysts tracking Rigetti rate it a buy, with one neutral. All ten covering D-Wave Quantum recommend buying. Benchmark analyst David Williams recently raised his price target for Rigetti from $20 to $50, provoking what he described as the most hate mail he has received in over fourteen years.
Williams noted that retail traders and momentum seekers are heavily involved in the market and that prolonged timelines make price swings inevitable. “Quantum’s not going to escape a broader market selloff,” he said.
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https://bitcoinethereumnews.com/finance/rigetti-and-d-wave-stocks-have-jumped-over-1900-despite-minimal-revenue-and-no-near-term-profitability/