Quantum Computing Stocks IonQ, Rigetti, and D-Wave Just Soared 72% in Seven Trading Sessions. Here Is the Honest Assessment.

The recent movement of quantum computing stocks has a familiar feel to it. The kind of familiarity that causes seasoned investors to recline in their seats, let out a slow breath, and grab their notebooks.

Shares of IonQ, Rigetti Computing, and D-Wave Systems increased by 72%, 37%, and 56%, respectively, between April 9 and April 20. There are seven trading sessions. That’s all. Such numbers typically have a backstory, and this one has too many reminders of previous manias to be disregarded.

These days, you’ll hear the term “quantum” thrown around at any tech-focused investor gathering in San Francisco or New York, just as “blockchain” was in 2017 or “dot-com” was in 1999. Yes, there’s excitement, but there’s also a certain nervous energy. Even though there is disagreement over whether the rocket has fuel yet, people want to get inside before it leaves the launchpad. According to Boston Consulting Group, the addressable market may grow to $850 billion by 2040. That window is large and spacious.

The bull case isn’t a pipe dream. Customers who wish to conduct experiments on devices manufactured by IonQ, Rigetti, and D-Wave can now use Amazon’s Braket cloud service. A press release feels less like marketing and more like evidence of life when a Magnificent Seven name is added as a partner. Investors seem to think that if Amazon shows interest, the others will follow. Perhaps they will. Perhaps.

However, it’s difficult to ignore how brief the journey has been. For the most part, quantum computers remain laboratory devices. They operate in cool rooms under the supervision of physicists wearing fleece jackets, and they find solutions to issues that most companies haven’t yet figured out how to implement commercially. During a rally, the gap between “this technology exists” and “this technology generates meaningful revenue” is typically larger than markets are willing to acknowledge.

At this party, history keeps showing up like an unexpected guest. Nearly every significant technological advancement since the mid-1990s, including the internet, 3D printing, legalization of cannabis, blockchain, and the metaverse, has experienced an early-stage bubble before settling into something more resilient. As the saying goes, investors overestimate adoption in the short run and underestimate it in the long run. That pattern is almost perfectly matched by quantum computing. It is an early stage of commercialization. The optimization process is just getting started. However, the multiples on these stocks indicate that the market has already determined the outcome.

Additionally, there is the issue of competition, which receives insufficient attention. Quantum computing may have a lower entry barrier than current estimates indicate. Quantinuum, a spinoff of Honeywell, Google, IBM, and Microsoft are all investing heavily in their own quantum initiatives. These pure-play brands are up against businesses that don’t have to chase quarterly catalysts, have larger budgets, and have longer runways. When your company is still pre-revenue at scale, that is a difficult battle to win.

As this develops, it appears that the rally is being propelled more by the gravitational pull of AI mania searching for related stories than by fundamentals. The next Nvidia is what investors who missed Nvidia’s run want. Quantum seems sufficiently futuristic to be eligible. The question of whether it truly yields returns that are comparable to those is another, and it is unlikely to be resolved this year or the next. One day, the technology might be revolutionary. Meanwhile, the stocks are something else. Here, caution does not equate to pessimism. It’s only recollection.