Two Potentially Searing Quantum Computing Shares Predicted to Drop by 80% by a Single Wall Street Expert
In the past two years, the Dow Jones Industrial Average, S&P 500, and Nasdaq Composite have been soaring, hitting multiple record-closing highs in 2024. Various factors have fueled this growth, including stock splits, stronger-than-expected corporate earnings, and even Donald Trump's victory, leading to double-digit gains for major indexes. Yet, nothing has ignited excitement on Wall Street as much as the rise of artificial intelligence (AI). However, AI is starting to take a back seat as quantum computing emerges as the potential next big thing in the tech world.
The Promising Potential of Quantum Computing
Quantum computing, a potentially revolutionary technology that makes use of quantum mechanics, could solve complex problems that traditional computers can't. Unlike classical computers, which are limited by binary digits (bits), quantum computers can manipulate quantum bits (qubits) that can exist in multiple states simultaneously. This ability to process large amounts of data and conduct simulation processes with minimal errors can revolutionize various industries.
In terms of AI, quantum computing can speed up image and language processing, thanks to quantum parallelism, which allows multiple tasks to be performed simultaneously. Furthermore, it can improve AI algorithms, leading to faster machine learning. Quantum computing can also benefit pharmaceutical and biotech companies by allowing them to simulate molecule interactions, potentially leading to breakthroughs in drug development. Energy management can also benefit from quantum computing by aligning energy consumption and availability and managing energy storage more efficiently.
According to a report by Boston Consulting Group, quantum computing has the potential to add $450 billion to $850 billion in economic value globally by 2040. This has led to a surge in interest in quantum computing stocks, such as IonQ and Rigetti Computing, which have seen huge gains in the trailing-six-month period.
However, is this early stage market bubble about to burst?
Is the Quantum Computing Market in a Bubble?
As with any next-big-thing investment, history suggests that quantum computing stocks may be overvalued. Since the advent of the internet, investors have consistently overestimated how quickly new technologies would be adopted and gain mainstream utility, leading to investment bubbles. Quantum computing is still in its infancy, and it's uncertain when it will become a mature technology.
Additionally, quantum computing hasn't demonstrated that it can be scaled yet. While IonQ and Rigetti Computing have seen rapid growth, their current revenue is still minimal. Furthermore, the sustainability of their operating models is also unproven, given their ongoing net losses and cash burn.
While the potential of quantum computing is enormous, investors must approach this emerging market with caution. The sector is highly speculative, meaning that there are significant opportunities as well as risks involved. As with the metaverse, quantum computing is likely to require significant time and infrastructure to mature, which could mean that price targets set by analysts may be met sooner rather than later.
Given the predicted economic value of up to $850 billion by 2040 from quantum computing, some investors are turning to quantum computing stocks like IonQ and Rigetti Computing, leading to notable gains in their share prices. However, with quantum computing still in its early stages and the uncertainty of its scalability and profitability, it's essential to approach this emerging market with careful consideration and a risk-aware attitude, similar to other highly speculative technological investments.
Investors looking to allocate funds towards technology advancements may also consider analyzing how quantum computing could impact their current finance and investing strategies, such as AI and machine learning algorithms, or industries that may heavily benefit from its capabilities, like pharmaceuticals and energy management.
