Watch Out for Investing in These Quantum Computing Shares
Watch Out for Investing in These Quantum Computing Shares
Quantum computing, a technology with immense potential, took a hit when renowned tech CEO Jensen Huang from Nvidia suggested that a practical quantum computer might be decades away. Consequentially, shares of IonQ (IONQ 33.48%) and D-Wave Quantum (QBTS 22.41%) plunged, losing at least 45% from their peak prices.
The reason being, quantum computing is still in the cusp of realizing its potential, with no one managing to apply it to real-world problems successfully. Despite displaying peculiar quantum properties, enabling exponentially faster computations for certain types, existing quantum computers have yet to demonstrate any practical applications.
This theoretical longevity of big tech companies with substantial funds puts them in a favorable position for when the technology eventually matures. Betting on IonQ or D-Wave is essentially a gamble on a breakthrough around the corner, and the odds for which seem rather slim.
After the stock market collision, IonQ CEO Peter Chapman issued a statement, expressing optimism about the company's long-term future. He announced global quantum computing investments of $50 billion by the end of 2023 and anticipated IonQ's profitability with an annual revenue of $1 billion by 2030. Regrettably, the statement neglected to specify the strategy to achieve these forecasts.
Reaching these milestones requires developing a quantum computer capable of managing real-world problems faster than traditional computers in a few short years –an accomplishment that seems highly improbable.
IBM, a pioneer in quantum computing, has set an optimistic timeline for "beyond 2033," asserting that supercomputers employing quantum computing and traditional computing could tackle real-world problems. However, the degree of "quantum" in these supercomputers is still unclear.
Priced at around $6 billion, IonQ operates predominantly as a science experiment venture.
D-Wave's CEO, Alan Baratz, countered Huang's comments by saying he was mistaken. He acknowledged that viable universal quantum computers may be decades away but emphasized the usefulness of D-Wave's annealing quantum computers in business applications.
Annealing quantum computers specialize in solving a limited set of optimization problems. A decade ago, Alphabet researchers confirmed substantial performance gains from D-Wave's quantum computers in comparison to traditional computers for specific optimization tasks. However, they also pointed out the imperative need for advancing the next-generation annealers to accommodate practical applications.
Since then, D-Wave has failed to yield substantial revenue from its quantum computers. By September 2024, the company recorded a revenue of $6.5 million, revealing its limited utility.
Valued over $800 million, D-Wave employs a distinctive approach to quantum computing. While its adoption and commercial potential remain elusive, they may still be several years or even decades away.
Quantum computing is a captivating realm, but it's a field that has progressed sluggishly for decades. The possibility of quantum computers outperforming conventional ones in dealing with real-world problems is promising but not guaranteed – especially not in the foreseeable future.
Both IonQ and D-Wave may contribute significantly to quantum computing research but plunging millions into these investments carries substantial risks.
In the context of financial investments, it's important to consider the potential timeline for quantum computing technologies to mature. Despite the optimism around IonQ and D-Wave, betting on their breakthroughs is seen as a gamble given the slim odds of achieving practical applications in a few years.
Moreover, managing money in this sector requires a long-term perspective, as quantum computing companies like IonQ aim to become profitable by 2030, with ambitious investment plans of $50 billion by 2023. However, the strategy to meet these goals is not yet clearly outlined.