Nvidia CEO Jensen Huang Just Delivered Terrible News for Quantum Computing Stocks

Of all the futuristic technologies being explored by big technology companies and start-ups, quantum computing is one of the most exciting. There are some types of computational problems that are simply impossible for even the world's most powerful supercomputer to solve. If you could pool all the traditional computing power in use today around the world, some of these calculations would take billions, trillions, or quadrillions of years to complete.

Quantum computing offers a potential solution. The qubits that comprise a quantum computer are fuzzy. They're not 0 or 1 like a traditional bit, but instead some combination of those two states. This quantum strangeness can be harnessed to perform certain computations exponentially faster than a traditional supercomputer.

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Hype surrounding quantum computing has pushed up quantum computing stocks over the past few months. Shares of IonQ (NYSE: IONQ) and Rigetti Computing (NASDAQ: RGTI) rocketed higher in the final months of 2024, delivering incredible gains for investors.

This optimism isn't entirely misplaced. Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google recently announced that its Willow quantum chip was able to solve a thorny error correction problem and complete a particular computation in five minutes that would have taken a supercomputer 10 septillion years to churn through. Progress is clearly being made.

Jensen Huang rains on the parade

The quantum computing rally came to an abrupt end on Wednesday following comments from Nvidia CEO Jensen Huang. During a question-and-answer session with analysts, Huang put forth a more pessimistic view of the quantum computing timeline:

And so if you kind of said 15 years for very useful quantum computers, that'd probably be on the early side. If you said 30, is probably on the late side. But if you picked 20, I think a whole bunch of us would believe it.

As of midday Wednesday, shares of both IonQ and Rigetti Computing were down more than 40%. While both stocks are still up from pre-rally levels, the scope of this collapse and the fact that it was caused by a single comment are good indicators that the rally was a bubble, driven largely by euphoria.

Huang is almost certainly right that quantum computing is decades away from being useful. As I wrote in an article warning investors about buying IonQ stock, quantum computers have yet to beat traditional computers in any real-world task. The computation that Google's Willow chip performed is a toy problem designed to benchmark quantum computers. No one has come close to using a quantum computer to perform any of the real-world computations that traditional computers choke on.

It's also important to remember that quantum computing is not a new technology. International Business Machines (NYSE: IBM) built the first quantum computer more than 25 years ago. IBM, and now Google, IonQ, Rigetti, and others, have pushed the technology forward since then, but quantum computing is still very much a science experiment.

Huang sees 20 years as a realistic timeline for useful quantum computers, and that very well could be accurate. But it's also possible that quantum computers never prove to be useful for real-world computations.

Be careful with quantum computing stocks

The quantum computing rally has pushed market valuations for quantum computing stocks like IonQ and Rigetti Computing into the billions of dollars, despite minimal revenue and big losses. The likelihood of a breakthrough anytime soon that leads to commercially viable quantum computers is miniscule. There are a lot of problems that must still be solved before quantum computing even has a chance at being useful.

If you want to bet on quantum computing, stick with IBM or Alphabet. If the technology doesn't pan out or really does take decades to come to fruition, both companies will be just fine. The same can't be said for pure-play quantum computing stocks.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Timothy Green has positions in International Business Machines. The Motley Fool has positions in and recommends Alphabet and Nvidia. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.