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Quantum computing has been one of the hottest trends of the past few months as stocks have doubled or more alphabet‘s (NASDAQ: GOOG) Ad by Willow. Investors looking for some way to make a play in the quantum computing space have pushed microcap stocks into the stratosphere.
then NVIDIA (NASDAQ: NVDA) CEO Jensen Huang, who is revered in the tech industry, made some disparaging comments about the industry. This sent the stock down a lot. According to data provided by S&P Global Market Intelligence, IonQ (NYSE: IONQ) has fallen 32.3% this week, how much computer science (NASDAQ: QUBT) dropped by 48.7% and Ona D how much (NYSE: QBTS) dropped 36.9%.
The stock drop came after Nvidia CEO Jensen Huang’s Q&A with analysts at CES in Las Vegas. In response to a question about the future of quantum computing, he said the timeline may be 15 to 30 years until there are “very useful” quantum computers. Here is the relevant quote from Huang:
if you said 15 years very helpful quantum computers, that would probably be at the beginning. If you said 30 it’s probably at the end. But if you chose 20, I think many of us would believe it.
To be clear, Huang did not call quantum computing a pipe dream. In fact, he said, Nvidia is working with almost every quantum computing company in the world. But he believes current expectations for near-term revenue growth may be overstated.
The statement sparked pushback from quantum computing enthusiasts, but it’s hard to argue against the idea that we’re many years away from quantum computing becoming a meaningful business. Despite multibillion-dollar market caps before this week’s crash, IonQ, Quantum Computing and D-Wave had accumulated less than $50 million in revenue over the past 12 months.
The fundamentals don’t support the valuation, which is not surprising for an early-stage technology. The question now is when this will become a real business.
One person who rejects Huang’s thoughts is IonQ CEO Peter Chapman, who said today: “We believe IonQ will be profitable, with sales approaching $1 billion, by 2030.”
A revenue target of $1 billion that he “believes” is achievable doesn’t exactly disprove Huang’s thesis. It’s still a relatively small company, and IonQ is trading at seven times 2030 revenue, if IonQ can reach the $1 billion revenue level by then, as the CEO hopes.
He also highlighted the bigger issue, which is that big tech, including industry leader Nvidia, has invested $50 billion in quantum technologies. IonQ may be a pure play, but it may not have the biggest quantum business in 15 or 30 years.
