Should You Buy Quantum Computing Stocks in 2025?

Source The Motley Fool

Investors have been enamored with artificial intelligence (AI) stocks. Quantum computing stocks may be next. Companies such as Quantum Computing Inc. (NASDAQ: QUBT), IonQ (NYSE: IONQ), and Rigetti Computing (NASDAQ: RGTI) are up big in the last few months. Investors are betting on these quantum computing companies as the technology hits the mainstream again, with recent breakthroughs from Alphabet's research division.

If commercialized, quantum computing could disrupt just about every industry in the world, but especially cloud computing, making it a technology potentially on par with the recent developments in AI. Should you buy quantum computing stocks like Rigetti and IonQ in 2025? Let's dig in further and find out.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Betting on technological breakthroughs

Quantum computing has the chance to disrupt many parts of the economy. But why? Simply put, quantum computers can offer a steep change in the complexity of problems that can be solved with computers. By using the uncertainty of quantum mechanics, the computers operate differently than traditional transistor-based systems, allowing a user to figure out problems instantly that would take a traditional supercomputer years. The technology promises to help a wide range of industries, from self-driving cars and agriculture to physics simulation and drug discovery.

The problem is getting these computers to work reliably. With hypersensitive quantum bits -- otherwise called Qubits -- that can get disrupted by the outside environment and introduce errors in the computing process, quantum computers have remained small for the time being and in the early stage research process. Recently, researchers have made progress in this area. For example, Alphabet's quantum computing division came out with a new quantum computer chip called Willow that reduces the errors in the quantum system as it scales up.

Other companies are working hard to solve these issues, including Rigetti Computing, IonQ, and Quantum Computing Inc. All three of these stocks are up hundreds of percents or more in the last few months. Quantum Computing Inc. is up over 4,000% in the last six months, bringing in some incredible returns for shareholders this year.

Big losses, high valuations

Investors are falling over themselves with these quantum computing growth stocks. However, if we look under the hood, the financials are not pretty. IonQ generated $37.5 million in revenue over the last 12 months, with a $171 million net loss. Rigetti generates just $12 million in revenue and loses $60 million a year. Quantum Computing Inc. is even worse, generating less than $1 million in annual revenue and losing $23 million a year.

All three of these stocks now have market caps in the billions and a price-to-sales ratio (P/S) above 100. Bulls and management may argue that the stocks reflect the future potential of these companies. If quantum computing is solved, revenue and earnings for some of these businesses will soar.

That's a big caveat, though -- "if" quantum computing can be brought to the masses. Who is to say it will ever happen, or if it will occur within the next few years?

QUBT PS Ratio Chart

QUBT PS Ratio data by YCharts.

Should you buy quantum computing stocks?

I have no qualms with investors betting on an emerging sector. There was a lot of money to be made from the AI boom of the last few years, and it likely will be in the future. There is a difference between AI and quantum computing: Companies have already figured out how to bring AI tools to the individual and to businesses through software. It is still unclear whether progress in quantum computing will get far enough to make the technology mainstream.

If it does, who is to say what companies will be the ones to do it? They could be the three hot stocks listed above, but it could also be Alphabet with its vast resources and unlimited budget, or a new company. Expectations for these stocks have soared, making it even more difficult to rationalize where they trade. These are companies with barely any revenue that have market caps in the billions. The numbers don't make sense.

An unproven technology in the early stages, uncertainty around who the winning company will be, and nosebleed valuations: These are not the characteristics that indicate strong future returns for shareholders. Avoid buying quantum computing stocks for your portfolio in 2025.

Don’t miss this second chance at a potentially lucrative opportunity

Ever feel like you missed the boat in buying the most successful stocks? Then you’ll want to hear this.

On rare occasions, our expert team of analysts issues a “Double Down” stock recommendation for companies that they think are about to pop. If you’re worried you’ve already missed your chance to invest, now is the best time to buy before it’s too late. And the numbers speak for themselves:

  • Nvidia: if you invested $1,000 when we doubled down in 2009, you’d have $349,279!*
  • Apple: if you invested $1,000 when we doubled down in 2008, you’d have $48,196!*
  • Netflix: if you invested $1,000 when we doubled down in 2004, you’d have $490,243!*

Right now, we’re issuing “Double Down” alerts for three incredible companies, and there may not be another chance like this anytime soon.

See 3 “Double Down” stocks »

*Stock Advisor returns as of December 16, 2024

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Brett Schafer has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
US Dollar hits fresh two-year high ahead of PCE inflationThe US Dollar (USD) retreats slightly on Friday, with the DXY Index trading at around 108.20 after eking out another fresh two-year high of 108.55 during the Asian-Pacific trading session. The move was supported by rising US Treasury yields, widening
Author  FXStreet
Dec 20, Fri
The US Dollar (USD) retreats slightly on Friday, with the DXY Index trading at around 108.20 after eking out another fresh two-year high of 108.55 during the Asian-Pacific trading session. The move was supported by rising US Treasury yields, widening
placeholder
American Express: Buy, Sell, or Hold?American Express (NYSE: AXP) shares have been on an absolute tear. In the past 14 months, they have catapulted 100% higher (as of Dec. 16), consistently hitting fresh all-time high
Author  The Motley Fool
Dec 20, Fri
American Express (NYSE: AXP) shares have been on an absolute tear. In the past 14 months, they have catapulted 100% higher (as of Dec. 16), consistently hitting fresh all-time high
placeholder
USD/JPY dips to test a previous top at 156.60 following hot Japanese inflationThe Yen is picking up from five-month lows on Friday, supported by a somewhat softer US Dollar and hot Japanese inflation figures.
Author  FXStreet
Dec 20, Fri
The Yen is picking up from five-month lows on Friday, supported by a somewhat softer US Dollar and hot Japanese inflation figures.
placeholder
Solana whale sbfonchain.sol is back to buying the hottest meme tokensOne of the most widely watched meme token traders, sbfonchain.sol, is back to buying.
Author  Cryptopolitan
Dec 20, Fri
One of the most widely watched meme token traders, sbfonchain.sol, is back to buying.
placeholder
Crude Oil set for weekly loss as Fed cuts off any rally attemptOil prices saw recovery attempts fail and edges lower for the fifth consecutive day on Friday.
Author  FXStreet
Dec 20, Fri
Oil prices saw recovery attempts fail and edges lower for the fifth consecutive day on Friday.
goTop
quote