Quantum computing seems to be just around the corner. But "really close" is never the same thing as "done," a definition that portfolio managers are quick to point out in the hype surrounding quantum computing technology.
This underlines the wild ride of quantum computing stocks like IonQ and Rigetti Computing which jumped after Google's breakthrough new quantum computing chip, called "Willow," spurred a wave of renewed investor interest in the technology. But then the stocks crashed last week after Nvidia CEO Jensen Huang strongly suggested that the technology is really a long term play, a view endorsed by Meta Platforms CEO Mark Zuckerberg.
The Problem With Quantum Computing
The key dilemma faced by Quantum computing investors is this: It's unclear if the technology is ready for prime time.
"It doesn't look like there's a very large addressable market," Joe Tigay, a portfolio manager of the Rational Equity Armor Fund at Catalyst Funds, told Investor's Business Daily. "There's a large market for research and development, but for the average consumer putting it into retail, it's not ready to replace a computer anytime soon."
Google's announcement sparked excitement, Google stock itself broke out of a cup-with-handle setup to climb comfortably into a pivot zone, where it has remained over the last month in trading. Tigay said Google gave quantum computing a much-need lift, showing "that it is possible and that it could be around the corner."
But Tigay added: "How soon that is — that's anybody's guess."
Bits Versus Qubits: Inside Quantum Computing
Quantum computers won't replace classical computers, like your laptop or smartphones, anytime soon.
For now, they are considered little more than a scientific novelty. "It doesn't look like there's a very large addressable market," said Tigay. "There's a large market for research and development, but for the average consumer putting it into retail, it's not ready to replace a computer anytime soon."
Part of what makes quantum computers impractical lies in a fundamentally different structure from classical computers. Where classical computers use groups of bits, or zeros and ones, to store and process data, quantum computers use qubits, which can hold a superposition of all possible states.
A classical computer, for instance, needs multiple bits to encode all the possible solutions to a two-coin toss: heads-heads, heads-tails, tails-heads and tails-tails. A quantum computer needs only one qubit, which can hold every possible outcome as well as their probability.
This structure makes them particularly fast and efficient at solving large, complex mathematics equations. But they also require a new paradigm in computer programming to take advantage of this ability.
Quantum Computing Attention Boosts Adjacent Stocks
The downbeat comments from Huang and Zuckerberg clearly spooked quantum computing investors. But quantum computing stocks have also attracted more attention.
Quantum Computing saw shares skyrocket by more than 2,000% before giving up some of those gains. D-Wave Quantum, meanwhile, saw shares surge to a 52-week high of $11.41 before receding.
For now, a wild card in the trajectory of quantum computing is the company that sparked a quantum computing rally last year: Google. Tigay says Google parent Alphabet is one of the few companies big enough to fund quantum computing development — and conversely big enough to make use of it when the technology becomes practical.
Alphabet commands a sprawling business empire that includes everything from self-driving cars to health and biosciences. "The thing that really impresses me about Alphabet is yes, we know Google from their search, and they're able to spend 'fun money' on this cool research and development," Tigay said. "But they have a very wide business, and this specific application can help them in many different ways."
"Alphabet is the closest to being able to turn this into something that makes money," he said.
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