Nvidia CEO’s Remarks Hit Quantum Computing Stocks

TradingKey - Nvidia CEO Jensen Huang’s remarks on Wednesday about the technology hit stocks in the quantum computing sector. He predicted it could take decades for the technology to see widespread adoption, leading to declines in the shares of IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing.

“If you kind of said 15 years for very useful quantum computers, that would probably be on the early side. If you said 30, it’s probably on the late side,” Huang said. “If you picked 20, I think a whole bunch of us would believe it.”

Huang also noted that quantum computers are well-suited for solving "small data, big compute" problems but are less effective for tasks requiring large datasets due to the reliance on microwave communication with these systems.

Last month, Alphabet, Google’s parent company, announced a breakthrough in quantum computing with the release of a quantum chip called Willow. This news sparked a significant rally in quantum computing stocks toward the end of 2024.

Over the past three months, as of Tuesday’s close, the stock price of Quantum Computing Inc. and Rigetti Computing surged by more than 2,000%. D-Wave Quantum’s shares rose by 942%, while IonQ’s stock climbed 419% during the same period.

Skepticism about quantum computing’s ability to generate revenue has persisted. For instance, Quantum Computing Inc. reported just $101,000 in revenue for the third quarter. According to a FactSet analyst, its revenue for 2024 is estimated to reach only about $500,000.

Tom Essaye, founder and president of Sevens Report, also pointed out that quantum computing is far from commercialization and lags even behind the nascent stages of artificial intelligence.  

“But the explosion of Nvidia and other AI-linked techs has, like in the late 1990s, made investors salivate over any technology that could be ‘next,’ and the Amazon and Google quantum-computing headlines have lent some validity to a topic that, previously, was almost exclusively a small-cap discussion,” Essaye said.

Meanwhile, pursuing quantum computing remains a core principle for tech pioneers and government agencies. Earlier this year, the U.S. government took supportive action, with bipartisan senators proposing $2.7 billion in funding for quantum research.

Although Huang is skeptical about near-term progress in quantum computing, Nvidia plays a significant role in the quantum ecosystem through its partnerships with "almost every quantum company" and the extension of its CUDA software to quantum computing. IonQ has successfully integrated Nvidia’s quantum development toolkit to enhance its research capabilities. Similarly, Quantum Computing Inc. has advanced its quantum software offerings, reflecting ongoing progress in the field.

The challenges currently facing the quantum computing sector may serve as catalysts for further innovation and investment. As the field evolves, staying attuned to new developments and preparing for future opportunities will be critical for investors.