Beyond the Hype: Wall Street’s Quantum Computing Pure-Plays Are at Risk from Four Monumental Risks.
Pure-play quantum computing stocks comparison
Over the past year, the stock of pure-play quantum computing darlings IonQ, Rigetti Computing, D-Wave Systems, and Quantum Computing, Inc. has risen dramatically, from 620% to 5,710%, but these enormous profits are subject to serious concerns.
The Allure of Quantum: A Trillion-Dollar Opportunity
In order to solve extraordinarily difficult problems that traditional computers are unable to handle, quantum computing makes use of specialised processors and the concepts of quantum physics. This technology has a wide range of possible real-world uses, including as improving cybersecurity systems, expediting drug development, and greatly boosting the learning components of artificial intelligence (AI) algorithms.
According to some estimates, quantum computing might approach or surpass $1 trillion in additional global economic value by 2035 to 2040, indicating the vast exploitable opportunity. Growth-seeking investors are drawn to this significant potential, which is large enough to potentially support several winners.
The market has rewarded these pure plays with tremendous returns during the previous year as of the closing bell on October 10:
- A 5,710% increase was seen in Rigetti Computing.
- D-Wave Quantum saw a 3,600% increase in value.
- There was a 2,780% increase in Quantum Computing, Inc. .
- IonQ saw a rise of 620%.
Gains of this size, however, have the potential to reveal the hype surrounding the quantum computing revolution as well as its enormous perils. The parabolic rises that IonQ, Rigetti, D-Wave, and Quantum Computing, Inc. have experienced could be derailed by the following four main threats.
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History Is No Friend to Early-Stage Innovations
The touted technologies and next-big-thing trends of the past three decades have set a precedent that is unquestionably a problem for the four quantum computing pure-play equities. The past is “not the friend of next-big-thing innovations” .
Game-changing inventions have continuously survived a “early innings bubble-bursting event” for at least the last 30 years. This pattern arises when investors consistently overestimate the usefulness or pace of adoption of a recently released technology, ultimately leading to the failure to meet ambitious growth predictions.
The spread of the internet, genome decoding, nanotechnology, 3D printing, blockchain technology, cannabis, and the metaverse are a few examples of trends that have followed this pattern.
This unspoken rule is unlikely to be broken, as evidenced by the development of quantum computing. Businesses are still far from optimising quantum computing solutions or making a profit on these investments, despite the technology’s enormous real-world potential. All of the characteristics of a bubble are present right now, according to historical data.
Capital Needs Spell Shareholder Dilution
The second significant risk is the high likelihood that these pure-play businesses IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing, Inc. will have to dilute their current shareholders possibly repeatedly in order to raise money and stay solvent.
All four businesses are losing a lot of money on their operations and quickly depleting the cash on their balance sheets, even though they have a lot of potential for sales growth over the next few years. This capital burn is demonstrated by operating losses recorded through the first half of 2025:
- IonQ suffered $236.3 million in damages.
- Rigetti Computing reported $41.5 million in losses.
- D-Wave Quantum reported $37.8 million in losses.
- Quantum Computing, Inc. disclosed $18.5 million in losses.
Due to their operational inexperience, these businesses do not have as much access to conventional finance and credit alternatives. As a result, in the upcoming years, issuing new stock and expanding the number of outstanding shares may be the only reliable way to raise the required capital, which would likely have a negative effect on current owners.
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Valuations Defy Historical Precedent
The pure-play quantum computing stocks’ valuations are even more striking if the stock market as a whole appears pricey. The current values of IonQ, Rigetti, D-Wave, and Quantum Computing, Inc. are not well supported by the tried-and-true price-to-sales (P/S) ratio.
Leading companies like Microsoft, Amazon, and Cisco Systems have historically peaked with trailing-12-month (TTM) P/S ratios roughly in the range of 30 to 40 after the introduction and growth of the internet. P/S ratios of 30 or above are not sustainable or well-tolerated on Wall Street, as historical precedent has repeatedly shown.
Rounded to the closest whole number, the TTM P/S ratios for the quantum computing industry are significantly higher at the moment:
- 8,965 for Quantum Computing, Inc.
- 1,406 for Rigetti Computing.
- Quantum D-Wave: 379.
- IonQ: 308.
The forecasted P/S ratios for 2029, even when examining Wall Street’s consensus sales predictions four years out, still fall between 30 and 90, which are considered historically unsustainable numbers.
The Undeniable Threat of the “Magnificent Seven”
The “Magnificent Seven” (Mag 7) firms’ enormous power and wealth provide the last significant threat to the “Fab 4” quantum computing pure-plays. Some of Wall Street’s most powerful companies in industries like advertising, cloud computing, and artificial intelligence are represented by the Mag 7. This group includes seven out of ten U.S.-traded stocks that have ever achieved the trillion-dollar market cap plateau.
Importantly, members of the Mag 7 are producing “boatloads of operating cash flow,” which allows businesses to carry out significant share repurchase plans or dividend payments, with Tesla being the most recent exception.
At the moment, customers can access specialised processors made by IonQ and Rigetti Computing through Amazon’s quantum computing service, Braket. But it doesn’t seem likely that Amazon and its Mag 7 competitors will keep outsourcing their infrastructure requirements for quantum computing.
These companies have far more money than they know how to spend, and they have a strong desire to be at the forefront of every new development. The Mag 7 companies have a longer-term competitive advantage due to their significantly larger budgets and more clout, even though IonQ, Rigetti, D-Wave, and Quantum Computing, Inc. enjoy first-mover advantages.
Despite the substantial historical and valuational dangers, some Wall Street analysts remain bullish about these equities. Some analysts have set high price goals, such as Edward Woo, Suji Desilva, David Williams, and Craig Ellis. These analysts predict that IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing Inc.’s stocks might rise by as much as 118%. Early-stage contracts, operational performance, and product commercialisation are some of the factors mentioned for this expected upside.
Analyst Optimism Offers an Alternative
For investors in quantum computing, the juxtaposition of historic risk patterns, extraordinary valuations, and skyrocketing stock gains creates an extremely unpredictable environment. Would you prefer a more thorough analysis of the four firms’ operating losses in the first half of 2025, or maybe a closer look at the reasons why their current price-to-sales ratios are seen as historically unsustainable?
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