It’s not every day that a company with barely any revenue and just five purchase orders reaches a billion-dollar valuation on Wall Street.
That’s the story of Quantum Computing (QUBT), a New Jersey-based integrated photonics company building affordable quantum machines for the higher-performance computing, AI, cybersecurity, and remote sensing industries.
Just like AI, quantum computing has become one of Wall Street’s favorite buzzwords.
While the hype is certainly warranted — quantum computing can potentially solve complex problems that traditional computers cannot address while accelerating R&D around drug discovery and materials science — the industry is very much in its infancy.
QUBT is an example of a stock that has received all of the hype without any fundamentals backing it up. On Thursday, the company is expected to report its financial results for the quarter ending Dec. 31.
Analysts expect QUBT to report a 166.7% increase in revenue. But don’t get your hopes up — company-wide revenues are expected to reach roughly $200,000 from $75,000 a year ago.
At this rate, QUBT is earning less than a seasoned Silicon Valley computer scientist, based on Glassdoor salary data.
Yet, QUBT has traded as high as $27.15 a share over the past 52 weeks. It’s given up most of its gains and currently trades below $9.00 a share for a total market cap of $1.1 billion.
Investing in QUBT isn’t for the faint of heart. After rallying more than 1,900% in 2024, the stock is down 48% year-to-date. Investors who are considering taking a quantum leap with QUBT should tread carefully.
The case for quantum (and QUBT)
While QUBT’s business clearly doesn’t justify its market cap today, there’s a reason investors have added it to their watch list.
Research from Boston Consulting Group suggests that quantum computing will create $850 billion worth of economic value by 2040.
Quantum computing startups have raised billions of dollars from deep-pocketed venture capitalists, who expect the industry to generate significant revenue from hardware and software sales.
However, the real question is when can these venture firms expect to receive a return on their investment. Nobody knows for sure.
“While there are clear scientific and commercial problems for which quantum solutions will one day far surpass the classical alternative, it has yet to demonstrate this advantage at scale. Nonetheless, the momentum is undeniable,” said Boston Consulting Group’s vice president, Jean-Francois Bobier.
At this rate, betting on quantum stocks like QUBT is betting that the industry will reach its commercialization potential soon. Analysts are divided on this possibility.
Some say quantum computing won't be commercialized until at least the early 2030s. Venture investor Karthee Madasamy, however, believes the first quantum applications could go live within a few years.
The good news is that QUBT has a lot more going for it than its paltry sales numbers.
The company is establishing a new manufacturing facility in Arizona, with production expected to begin later this year. The plant will produce thin-film lithium niobate, which is used to power quantum computing.
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