The entire Quantum Computing stock industry took a massive hit on Wednesday as NVIDIA CEO, Jensen Huang, made comments about the industry during the company’s investor day.
Juang commented that “If you said 15 years for very useful quantum computers, that would probably be on the early side,”. Juang followed-up with “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.”
Quantum computing has taken the lead role, in terms of performance, from Ai industry stocks over the last two months since Google announced the development of its “Willow” chip.
The Willow chip demonstrates that quantum computers can solve specific problems much faster than classical supercomputers. Google announced that Willow performed a standard benchmark computation in under five minutes that would take one of today’s fastest supercomputers 10 septillion years.
Google is the strongest candidate for quantum computing hardware breakthroughs over the next 5 years.
Google shares are trading lower by 1.5% immediately following Huang’s comments.
Developmental Companies Hit the Hardest
Among the largest lowers Wednesday are shares of Rigetti Computing (RGTI), IonQ Inc. (IONQ), D-Wave Quantum Inc. (QBTS) and Quantum Computing Inc. (QUBT). On average, each of these stocks started the day trading more than 20% lower.
Shares in each of these quantum-related stocks have been trading near, or at, their respective all-time highs. The fast, aggressive and parabolic rally in these stocks called for a “healthy correction” from their lofty values, they just needed a trigger. In this case, Jensen Huang’s well-timed comments served well for that purpose.
It is notable that NVIDIA shares traded higher in the wake of Huang’s commentary, shares had been lower by 1.5% before the comments.
Will Investors Return?
The short answer it “yes”.
The term “fear of missing out” is one of the most popular phrases for a reason.
Huang is right, quantum computing is far from being “just around the corner” in terms of being a reality. Google expects to see benefits from the development of quantum computing over the next five years.
There’s the catch, the full-blown development of quantum computing may be 5-, 10-, even 15-years away from today. But true quantum computing will represent the sum of the pieces that are being developed over that time.
Between now and then, the development of those “pieces” will generate value for these and other companies within the quantum computing industry.
Perfect example from NVIDIA.
NVIDIA’s first product was the NV1, a graphics accelerator card released in 1995.
It was a groundbreaking product for its time, featuring support for both 2D and 3D graphics rendering. The NV1 used quadratic texture mapping, a different approach from the triangle-based 3D rendering that eventually became standard in the industry.
NVIDIA had plenty of +1000% return years followed by -90% gain losses to get to where the company is today.
Consider that a small “piece” of what helped build NVIDIA into the AI leader it is today.
Now Compare to Rigetti…
Rigetti Computing’s quantum systems are operational and accessible to businesses today.
Their Ankaa-3, is an 84-qubit quantum processor with 99.5% two-qubit gate fidelity. The product is available through their Quantum Cloud Services (QCS) platform. The cloud system is being integrated to major cloud providers like Amazon Braket and Microsoft Azure by early 2025.
Rigetti has offered quantum computing access via QCS since 2017, enabling businesses and researchers to develop and run quantum algorithms.
While quantum computing is still evolving, Rigetti’s systems provide an operational platform for exploring practical quantum applications across industries.
That said, the quantum computing companies are not likely to drop from investor’s “radar” as the long-term prospect for these stocks is relatively clear.
Here’s What to Expect from Rigetti Stock.
Rigetti stock was trading well into overbought territory ahead of today’s comments from Jensen Huang. Put simply, the stock needed a healthy correction to bring expectations back to earth.
It shouldn’t be a surprise to any trader that the stock had run into what appeared to be significant resistance at $20. One of the simplest rule of trading, not investing, is that stocks find support and resistance at round numbers.
As I type this, Rigetti shares are bouncing from the $10 price after declining 45%. Not so ironically, $10 is also the price that Rigetti shares began trading at in April 2021.
Investors and traders will take their cue from the round numbers. The stock is likely to break back below $10 followed by a decline to $7.50 and then possibly $5. Each of these price levels will see investors and traders step in to “Buy the Dip” on the way down.
From a strictly technical view, Rigetti shares should also conjure some buying interest at the $6 level. The stock’s bullish 50-day moving average sits at this price.
Bottom Line for Rigetti and Other Quantum Computing Stocks
It’s hard to put the “Genie” back in the bottle when it comes to investing.
Quantum computing will continue to develop, providing useful products and services along the way. Those developments will serve to satisfy investor’s short-term need to rationalize the long-term goal of buying and holding many of these stocks.
As I have pointed out with each of these outlooks, investors need to remember that quantum computing stocks are very much in the early stages of development. Several companies will rise and fall through the exciting development period. Investors need to assess those risks as they consider opening positions.
The article featured on MoneyMorning.
Related article: Quantum computing stocks crashed after Nvidia CEO comments
Disclosure: This article does not represent investment advice. The content and materials featured on this page are for educational purposes only.
