Quantum Computing Stocks Decline After Nvidia CEO's Remarks

On January 8, quantum computing stocks experienced a significant drop, marking the end of a year-long rally. This decline followed comments made by Nvidia CEO Jensen Huang, who suggested that the practical application of quantum computing could be two decades away.

Huang's statement on the extended timeline for achieving "very useful quantum computers" has dampened enthusiasm in a sector that was already expected to invest millions into quantum technology. Currently, quantum computers are capable of performing only specialized calculations.

During his remarks, Huang mentioned, "If you kind of said 15 years… that’d probably be on the early side. If you said 30, it’s probably on the late side. But if you picked 20, I think a whole bunch of us would believe it." This sentiment suggests a long wait ahead for advancements in quantum computing.

Companies such as Rigetti Computing, D-Wave Quantum, Quantum Computing, and IonQ all saw their stock prices drop by over 35%. These losses contributed to a total decrease in market value exceeding $5 billion for the sector.

Thomas Hayes, chairman of Great Hill Capital, commented on the situation, stating, "Any dollar chasing quantum computing stocks is not chasing AI stocks. Jensen threw a wet blanket on the quantum story and did everything he could to sell the AI story. It’s that simple." This indicates a shift in investor focus towards artificial intelligence rather than quantum computing.

This downturn was notable given that the stocks of those four quantum computing companies had increased at least threefold over the past year, largely due to a breakthrough announced by Google in December and the rise in computing demands spurred by generative AI.

Google introduced a new chip capable of resolving a complex computing problem in five minutes, a task that would take a traditional computer longer than the age of the universe. Additionally, in April, Microsoft and Quantinuum claimed to have made strides toward making quantum computing commercially viable, although they refrained from estimating the timeline to outpace conventional supercomputers.

Investment experts are now aligning themselves with Huang's timeline. "The 15 to 20 year timeline seems very realistic," said Ivana Delevska, investment chief of Spear Invest, which holds shares in Rigetti and IonQ through an actively managed ETF. She added, "That is roughly what it took Nvidia to develop accelerated computing." This assessment underscores the cautious outlook within the investment community regarding the future of quantum computing technology.

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