Data collected from Finviz, Yahoo! Finance, and YCharts on Jan. 3, 2025.
All three stocks have been soaring since early November. The rally started in the days after the presidential election, which coincided with earnings reports from Quantum Computing and IonQ. D-Wave followed suit with quarterly results the next week, sparking another jolt in quantum computing-related stock charts.
The quantum computing experts did have some fresh news in December, lending another hand to the industry’s most bullish investors. For example, IonQ shipped its first quantum computer to a European customer. Quantum Computing took advantage of its soaring stock price to launch a stock offering on Dec. 10. D-Wave closed a larger stock offering two days later.
However, the bulk of December’s gains really sprung from November’s news.
The previous Trump administration provided some support for a less mature version of the quantum computing sector in 2020, and industry insiders are hoping for a stronger government commitment to quantum technologies in the next four years. In all fairness, Kamala Harris also voiced support for quantum computing in her campaign, but observers wondered why she wasn’t taking action in the framework of the Biden regime.
None of the three earnings reports were terribly impressive in their own right. The quantum computing companies missed Wall Street’s revenue targets, often by very large margins, and only Quantum Computing reported a smaller net loss than expected. But IonQ set up next-year sales targets just above the Street view at the time. D-Wave’s management sees smaller net losses in the next fiscal year.
On top of these effects, the concept of quantum computing is starting to turn heads on Wall Street and elsewhere. These systems have started to show promising results in small technology demos. In the long run, quantum computing should be able to solve computing problems far beyond the reach of digital computers.
That breakthrough will eventually break the cryptography people use today, find cures for complicated diseases, provide more accurate weather forecasts, and more. Investors are piling into pure-play quantum computing stocks today to profit from these expected technology developments in the long run.
First and foremost, the quantum computing systems required to deliver those projected long-term benefits are many years away.
Traditional computing giant (and leading quantum computing researcher) International Business Machines expects quantum computers to break today’s most popular encryption algorithms “by the late 2030s.” Quantum-safe encryption techniques are already available, using mathematical models difficult to crack even with this futuristic pattern-finding technology.
IBM and other security experts recommend switching important systems and processes to these “post-quantum” algorithms as soon as possible, removing that threat before it becomes a reality. That way, only the upside of quantum computing will remain, getting financial records and cryptocurrencies out of harm’s way.
That said, a 15-year head start might not be enough. The Y2K effect wasn’t properly managed until the last few months of 1999, when it became a historic emergency instead. And you may have heard that the internet is running out of available numeric addresses. The fix for this has been around since the turn of the millennium, but most internet service providers still don’t support the problem-solving IPv6 addresses. Let’s hope the switch to quantum-safe encryption goes much smoother.
I hope you caught the decade-plus timeline until people and companies will have access to truly useful quantum computers. The sector leaders you see today might still be leading the surge in the late 2030s — or they may have succumbed to deep financial losses and difficult research projects long before then.
Meanwhile, their stocks are trading at incredibly rich price-to-sales ratios, keeping the lights on by asking shareholders for more cash. I don’t know how IonQ, D-Wave, and Quantum Computing will fare in the long haul, but they look ready for a price correction fairly soon. I wouldn’t dare to short their stocks because that could get expensive if I’m wrong, but I highly recommend keeping your fingers away from these “buy” buttons in 2025.
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Anders Bylund has positions in International Business Machines. The Motley Fool recommends International Business Machines. The Motley Fool has a disclosure policy.
