Quantum computing stocks in free fall: Hype around technology dampened

The recent market developments have abruptly cut short the frothy highs of quantum computing stocks. After some of these stocks rose by more than 1,000 percent last year, a rapid price slide followed. The reason: Jensen Huang, CEO of Nvidia, expressed pessimism about short-term application possibilities of this technology and forecasted viable use cases only in a decade. This prompted investors to reconsider their highly speculative expectations, resulting in some stocks losing more than half of their value in recent trading days. Comparisons to the dot-com bubble arose, including from Bill Stone, Chief Investment Officer of Glenview Trust, who describes the current market situation as similarly unpredictable. The losers include D-Wave Quantum, Quantum Computing, and Rigetti Computing, which experienced significant slumps but made slight gains in pre-market trading on Tuesday. Although the promises of quantum technology, such as groundbreaking advances in medicine, materials science, and cryptography, are enormous, the current financial reality is perceived by many as sobering. Alphabet, which announced a breakthrough in quantum research late last year, also admitted that there are currently no practical applications. The hype even caught companies connected only by their name, like Quantum Corp. and Quantum-Si. Disillusioned investors are increasingly betting on falling prices. According to S3 Partners, the short position in the quantum computing stock sector recently increased significantly, accompanied by record numbers in options trading. Nevertheless, there are still defenders of the sector, such as Peter Chapman, CEO of IonQ, who remains optimistic and expects revenues in the billions for his company by the end of the decade. However, given the ongoing high losses, as forecasted for IonQ and Rigetti, profitability remains distant. Some investors, like Kevin Mahn of Hennion & Walsh Asset Management, remain curious despite the volatility. They argue that some of today’s leading tech companies were once viewed with similar skepticism. Should the tide turn, quantum stocks could come back into focus.