Nvidia Chief Executive Jensen Huang's controversial remarks about quantum computing reached Rigetti Computing CEO Subodh Kulkarni via text. A frantic acquaintance in the investment community wanted to know, "What's going on? Why is Jensen so negative about quantum computing?"
Gil Luria, an analyst with D.A. Davidson, had just given another quantum computing company, IonQ, a buy rating. He was following the CES event in January where the Nvidia CEO declared that quantum computing won't be "very useful" for 15-30 years.
Quantum Computing: Nvidia CEO Triggers Crash
"When I heard that, I rolled my eyes a little bit," Luria, the firm's head of technology research, told Investor's Business Daily. "But I realized that that was going to have an impact."
The impact was stunning. Huang's remarks sent quantum stocks crashing as Rigetti Computing plunged 45% in one day, while D-Wave Quantum shed 36%, IonQ tumbled 39% and Quantum Computing Inc. dropped 43%.
The slump turned a harsh spotlight on a technology that's expected to transform computing. But a debate rages on when it will actually take off and how big the quantum market will be in the near term.
Huang's comments also highlighted questions, even worries, about quantum computing's impact on artificial intelligence, the technology now in the Wall Street limelight and dominated by Nvidia.
Nvidia's First 'Quantum Day'
The debate will be rekindled this month when industry leaders gather in Silicon Valley for Nvidia's first Quantum Day. The March 20 event highlights a quirky twist in the controversy: Huang himself will be the host. Nvidia announced the gathering a week after its CEO's comments sent quantum computing stocks tumbling.
Top quantum industry executives are scheduled to speak. They include D-Wave Quantum CEO Alan Baratz, who said Huang reached out via email to invite him to Quantum Day shortly after his comments roiled the market. Asked how that conversation went, he said, "That's between me and him." Nvidia declined to comment for this story.
A Quantum Computing CEO Pushes Back
Baratz has been the most outspoken of the industry CEOs in hitting back at the Nvidia CEO's comments. He blasted Huang's remarks in a LinkedIn post as quantum computing stocks were plummeting. "I have not held back," he told IBD.
"The quantum computing industry is still young, and the investor market is still maturing," Baratz said. "Everybody's looking for any information that they can use to make decisions. Sometimes misinformation can get out there and drive decisions. And that's what happened with Jensen's comment. He's respected as somebody who has significant technology prowess. So when he says something stupid, people don't think it's stupid."
It certainly didn't help that Huang was talking about a very complex technology that has baffled even veteran technologists like Bill Gates.
What Is Quantum Computing?
Quantum computing is widely considered a powerful and exciting technology poised to outperform what the industry refers to as classical computing. The technology operates based on the principles of subatomic physics. A quantum computer uses subatomic particles, such as protons and electrons, and can perform computations exponentially faster than traditional computers.
But unlike classical computing, some quantum computing systems require specialized environments, including the need to store the machines at extremely low temperatures. They are also known to be very expensive, although quantum computing players offer a range of options.
Cost Of A Quantum Computer
Baratz said it costs D-Wave "less than $2 million to build, install and calibrate a quantum computer." D.A. Davidson analyst Alex Platt estimated that the typical cost is "in the tens of millions for a single system."
"It's an expensive price tag right now for sure," he told IBD.
That's a major hurdle for the technology, said Silicon Valley investor Rob Siegel, a management lecturer at the Stanford Graduate School of Business.
"Not only is the technology still very nascent, but to commercialize it requires an entire system-level design, and to put the systems together is a nontrivial task," he told IBD.
"The whole thing is a complex, expensive, big, power-hungry unit that needs to be put together. Nobody is shipping quantum computers in volume, on any kind of scale in the next five to seven years. No one, zero, zilch."
The Year of Quantum Computing
What made the turmoil triggered by Huang's comments frustrating for industry leaders is that it hit as they were basking in the glow of upbeat quantum computing news in late 2024.
Shares of IonQ rose in September after the company announced a $54.5 million contract with the U.S. Air Force Research Lab. Quantum computing stocks also rallied after Amazon announced its Quantum Embark Program, aimed at helping customers get ready for the technology.
The year closed with even bigger news. On Dec. 9, Google unveiled its latest quantum chip, called Willow. A week later, Quantum Computing Inc. announced that the National Aeronautics and Space Administration's Goddard Space Flight Center had awarded the company a quantum computing contract. The news sparked a rally not just in shares of Quantum Computing Inc., but also D-Wave, Rigetti and IonQ.
"We saw the excitement rise," Baratz said. "There was discussion that 2025 is the year for quantum. Jensen put some cold water on that."
Quantum Computing: A Question Of Timing
Baratz maintains that the perception that the technology is not yet ready for prime time is inaccurate and unfair. Quantum computing, he argues, is already having a meaningful impact.
"We have companies that are seeing benefits today, that are actually using our system today as part of our operation," he said. "We are delivering value today."
The view was echoed by Christian Klein, CEO of enterprise software giant SAP, which has been testing the use of quantum computing in running supply chains. The results have been promising and impressive, Klein said.
What would "normally, today, take a week we now can do in an hour," he told IBD. "Give this technology a few more years, probably we will talk hours or minutes at a certain point in time. We see quantum, not in 10 or 15 years, but certainly in three to four years."
Quantum Computing And AI
For Wall Street, a key question is what quantum computing means for the hot tech trend of the day: AI.
Silicon Valley veteran John Chambers, the former CEO of Cisco Systems, called the 2020s "the decade of AI." He downplayed the near-term impact of quantum computing on this trend.
"I think it is a very important technology, but it is further out," he told IBD. "If you're looking for economic returns in terms of products and the next five years, you're probably too far ahead of your headlights."
Siegel of Stanford downplayed quantum computing's potential impact on Nvidia.
"So for all the competitive things that should keep Jensen up at night for the next five to seven years, quantum should not be it," he said.
Others disagree.
In fact, quantum computing's impact on AI and Nvidia will be huge, D.A. Davidson analysts argue.
Luria said the technology poses "an existential threat" to the chip behemoth. He also stressed that quantum computing and AI are not competing trends.
"Quantum computing isn't what's next to AI," Luria said. "There are two parallel paths that are intersecting. Quantum will at some point be helpful toward creating really sophisticated AI. A quantum computer may replace the data center GPUs – but it's not replacing AI."
AI Impact: 'Sooner Than You Might Expect'
Baratz of D-Wave acknowledged that "nobody in the quantum industry today is having a significant impact on AI." But it could happen "sooner than you might expect," he said.
He pointed to the work that D-Wave is doing with the pharmaceutical division of Japanese Tobacco Inc. that is focused on using AI for drug discovery.
IonQ is also using its technology for drug discovery with the biopharma giant AstraZeneca. If IonQ succeeds, that work could be "a very very big deal," Luria said.
"If that was to happen, two, three, five years down the road, that would be the equivalent of a ChatGPT moment because then everyone would say, 'Oh wow, if we didn't have a quantum computer, we wouldn't have this new drug that's going to generate billions of dollars for AstraZeneca,'" he said.
Quantum Vs. Nvidia Chips
"Within a five-year time frame, it's going to get to a point where we're going to use a different type of architecture for the most complicated problems," Luria said.
To be sure, Nvidia chips, known as GPUs, will remain important in AI, he stressed.
But "we're not going to need Nvidia GPUs for everything," Luria said. "We're not going to need to build these increasingly large arrays of Nvidia GPUs, because we're going to be able to replace those with a quantum computer. And that's where their runway starts to end."
On the other hand, Huang's comments altered investors' perception of how much runway quantum computing stocks have before the segment takes off.
How Big Is Quantum Computing Market?
Quantum computing is projected to become a $90 billion to $170 billion market by 2040, according to a July 2024 Boston Consulting Group report.
Huang's comments spooked quantum computing investors who were banking on the technology taking off sooner than later.
"When your expected cash flows are far in the future, even a little change in how far in the future makes a lot of change to what the value is today," Luria said. "If I believe it's five years out, I think quantum computing is worth $10 billion today. If I believe it's 15 years out, it's only worth $2 billion. That's what happened broadly. People changed their minds about how far out it is."
"Investor behavior is often volatile when things are less concrete and more pie in the sky," he added.
Big Tech Companies Weigh In
But what was also striking was how that volatility was triggered, not by an industry or academic report or an earth-shattering disclosure by a major quantum computing player, but by the comments of prominent technology figures.
Shortly after Huang's remarks, Meta CEO Mark Zuckerberg echoed the Nvidia CEO's view. He told commentator Joe Rogan that quantum computing is "still quite a ways off from being a very useful paradigm."
While Huang is considered a tech executive who "is in the know," Zuckerberg offered what was essentially an offhand comment, Luria said.
"I listened to the Joe Rogan podcast. It was offhand," Luria said of Zuckerberg's comment. "He said, 'Look, I'm not really an expert, but it seems like it's decades away.' He is not an expert — but he's Mark Zuckerberg."
Baratz hammered the same point on what Zuckerberg said. "Seriously, once he said, 'I don't know anything about quantum,' everybody should just have ignored everything."
When Big Tech CEOs Speak
The biggest issue confronting the quantum computing industry, Baratz argued, is "around Big Tech CEOs who are misinformed, saying things either publicly or to customers that could stall our work with them."
Huang's remarks, he said, suggested that "either he didn't understand that there were different approaches to quantum or he did, and he just simply was sloppy in the language that he was using."
Kulkarni of Rigetti Computing was less critical of Huang, telling IBD: "Honestly, I didn't think it was as negative as what the media portrayed it to be. Because there was a context before and after. But unfortunately, that one sentence got a lot of coverage — and that sentence definitely was very negative."
Siegel of Stanford described Huang and Zuckerberg as "two very smart, powerful people, so when they talk, you listen."
"But I think anybody who's an analyst and is covering the quantum space should be talking to all the public and private companies, building a holistic picture," he said. "One or two comments by a couple of CEOs should not move the market 30%. But then again, I don't understand meme stocks."
Are Quantum Computing Stocks A Buy Now?
Quantum computing stocks stabilized for a couple weeks or more after the January crash, but they're down sharply from where they started the year. Shares of Rigetti, D-Wave and Quantum Computing Inc. have each maintained the highest-possible Relative Strength Rating of 99, according to MarketSurge. IonQ has an RS Rating of 98. But those ratings reflect the stocks' sharp gains last year. The relative strength lines on their stock charts show they have been underperforming the market recently.
Each stock's Composite Rating, which provides an overall score covering a combination of fundamental and technical metrics, also suggests caution. While Nvidia holds an impressive Composite Rating of 90 on a 1-99 scale, IonQ's is at 50, D-Wave at 73, Rigetti at 65 and Quantum Computing Inc. at 72.
A Wild Ride
"What was phenomenally interesting was how quickly this played out," Luria said, noting how the "quantum space declined by about half" after Huang and Zuckerberg said the technology will take a long time to have an impact. Then Nvidia announced its first Quantum Day, calling the technology "one of the most exciting areas in computer science, promising progress in accelerated computing beyond what's considered possible today." That same day, Microsoft unveiled its Quantum Ready program to help businesses prepare for the technology.
"And the whole thing doubled again, which is to say our expectations went from five years to 15 years to 10 years back to five years over a period of two weeks," Luria said. "That's how you can explain the stock moves: When discounting cash flows, it matters a lot if all my cash flows are five years out or 15 years out."
And clearly, quantum computing is a big deal for Big Tech. This was underscored last month when Microsoft unveiled its first quantum chip. Amazon made a similar quantum chip announcement a week later.
"These large technology companies want to convey that they are planning for the future of technology and the next big platform," Luria said. "Once Google released its Willow announcement, Microsoft and Amazon felt a need to make sure the technology community did not think of them as falling behind on this front."
Quantum Computing Powwow
In a way, the upcoming Nvidia Quantum Day comes across as the AI chip giant's way of making amends for the turmoil its CEO caused — and an affirmation of quantum computing's importance.
"Nvidia having a quantum day is very tangible," Luria said. "This is a result of them planning their future. If Nvidia really thought that quantum was 15 to 30 years out, would they have an event today? Probably not."
Kulkarni, Rigetti's CEO, said the Nvidia event "gives all of us a chance to be on the stage at the same time."
"This was a nice way to say, 'Let's have a good dialogue,'" he said. "These are all uncertain things."
Grappling With Uncertainty
In fact, the debate over quantum computing underscores how the tech industry routinely grapples with uncertainty. The recent tech sell-off sparked by the launch of DeepSeek's AI agent underscored this.
For decades, AI was viewed as a "pie in the sky" sci-fi concept, the stuff of "Star Wars" and "The Terminator." That changed in 2016 when AlphaGo, an AI program created by Google's DeepMind, became an international sensation when it defeated the world champion of Go, the board game that computers found difficult to master. Six years later, with the 2022 release of ChatGPT, AI exploded as a pop culture phenomenon now driving a powerful tech trend.
When will quantum computing have its AlphaGo or ChatGPT moment?
"No one's exactly, precisely going to be right," Kulkarni said. "We are all engineers by training. We all understand the risks with emerging technologies. It's good to have healthy dialogue with industry leaders."
Kulkarni even gives Huang some credit for making dialogue possible, even though he triggered the turmoil.
"Someone like him taking personal interest in hosting the event, I think carries a lot of credibility," he said. "I'm glad we have reached this outcome. I wish we didn't go through such movements of the stock prices. But that's our life I suppose."
