Are Rigetti Computing (RGTI), Quantum Computing Inc. (QUBT), D-Wave Quantum (QBTS) about to collapse?
Several pure-play quantum computing stocks have shed nearly half their value over the past month, as sky-high valuations collide with the reality that commercial quantum computing remains far over the horizon.
Shares of Rigetti Computing (RGTI), Quantum Computing Inc. (QUBT), D-Wave Quantum (QBTS), and IonQ (IONQ) have plunged between 44% and 54% over the past 30 days as of Nov. 13, according to Yahoo Finance data.
These companies were once touted as leaders of the coming “quantum revolution,” a technology shift that promises computers capable of solving certain classes of problems far faster than today’s machines by harnessing the principles of quantum physics.
However, investors are now confronting massive valuation risks: many of these companies traded at 200x to 900x sales, despite generating minimal revenue, posting widening losses, and offering uncertain timelines to commercialization.
Financial data provider Perplexity Finance estimates the group has lost more than $30 billion in combined market capitalization since their mid-October peaks.
A major reality check came earlier this year from Nvidia CEO Jensen Huang, who cautioned that, despite its long-term potential, practical, broadly useful quantum computing may still be 15 to 30 years away.
This has amplified concerns that the sector’s public-market valuations ran far ahead of technological progress.
Dot-com level valuation risks
The valuation crunch hitting quantum computing stocks isn’t occurring in isolation. Analysts have been warning for months that marketwide valuation risks are rising — and much of that pressure stems from a narrow group of Big Tech giants whose surging share prices now dominate the major indexes.
The “Magnificent Seven,” Apple (AAPL), Microsoft (MSFT), Alphabet (GOOG), Amazon (AMZN), Meta Platforms (META, Nvidia (NVDA), and Tesla (TSLA), have driven a disproportionate share of market gains.
Together, they now command a combined market value of roughly $22 trillion, representing about 37% of the entire S&P 500, according to Dow Jones.
As InvestorsObserver recently reported, these megacap stocks have propelled the market into overvalued territory according to two widely followed indicators.
The Buffett Indicator, which compares total U.S. stock market capitalization to GDP, and the Shiller CAPE ratio, which measures stock prices relative to long-term earnings.
Together, these metrics suggest the market, especially Big Tech, is priced at levels reminiscent of past bubbles. That raises the risk of a broader correction.
“The stock market is a giant bet on AI right now,” London Business School economist Rebecca Homkes told CBS News. “It’s really 10 companies that are driving all of it.”
That concentration can be easy to ignore in a rising market, but it becomes far riskier if momentum stalls.
“No one wants to be caught dancing after the music has stopped,” Janus Henderson portfolio manager Aaron Schaechterle warned.