Quantum computing stocks have been hot recently, but Jensen Huang just offered bullish investors a reality check.
Recently, Nvidia (NVDA -1.62%) CEO Jensen Huang made a head-turning and market-moving comment regarding his thoughts on quantum computing. Shares in this space sold off in response. Nevertheless, I predict that in 2025, quantum computing will become one of the next big waves for investors interested in artificial intelligence (AI).
What did Huang just say about quantum computing?
Huang shared his thoughts on applications of quantum computing during a panel discussion at this year’s CES conference in Las Vegas. Although the Nvidia executive seemed optimistic about the capabilities of quantum computing, he said the technology could take 20 years to become “very useful.”
Image source: Getty Images.
Why his comments are important
The chart below illustrates the price movements of several leading stocks in the quantum computing space. Over the past three months, stock prices of Computers Rigetti, Quantum computing, Quantum D-WaveAnd IonQ have each experienced considerable momentum.
RGTI data by YCharts.
However, all four stocks began experiencing sell-offs around the same time earlier this month. Personally, I don’t find the timing of Huang’s public comments and the surge in quantum computing stock prices to be a coincidence.
The dynamics illustrated above highlight some important ideas. First, just because quantum computing stocks have rallied in recent months doesn’t necessarily mean they’re wise investments. The reality is that all of the companies in the table above are early-stage companies: they are barely generating revenue and will continue to consume cash for some time.
This brings me to my second point. Influential Wall Street figures and business executives can sometimes move markets with their rhetoric. While Huang’s comments regarding quantum computing are by no means negative, his views have led many investors to recognize the unfortunate reality that quantum computing is going to be a long-term opportunity.
So those who bought quantum computing stocks in November and December likely found themselves as hapless bag holders.
Should we invest in quantum computing?
Given that Huang recognized that this technology has the potential to help solve increasingly large and sophisticated problems, the overarching question remains: does quantum computing deserve a place in your AI portfolio? In my opinion, there are several ways to invest in it. The first and most direct is to buy stocks specific to quantum computing.
However, a more isolated approach would be to invest in a quantum computing-themed exchange-traded fund (ETF), such as Quantum Defiance ETF. ETFs offer some degree of volatility cushioning since they are made up of a range of individual stocks. That said, thematic investing can be a riskier option than purchasing broader market funds because you will always be exposed to a specific focus area.
In my opinion, the best and most prudent way to invest in quantum computing would be to invest in shares of diversified mega-cap technology companies for which quantum computing is only one area of focus. Companies such as IBM, AlphabetAnd Microsoft All are exploring quantum computing as part of their AI roadmaps, but are not betting their entire future on this technology. Additionally, adjacent companies that will play a critical role in quantum chip development — Nvidia or Advanced microdevicesfor example – could also be suitable choices.
Ultimately, I agree with Huang that quantum computing has significant potential. However, it is almost impossible at this stage to identify which specific companies will emerge at the forefront of the trend, given that the technology is still far from being commercialized.
Suzanne Frey, an executive at Alphabet, is a member of the board of directors of The Motley Fool. Adam Spatacco holds positions at Alphabet, Microsoft and Nvidia. The Motley Fool holds positions and recommends Alphabet, International Business Machines, Microsoft and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
