Quantum Investing: Misaligned Bets in a Trillion Dollar Future
Nvidia CEO Jensen Huang can’t seem to catch a break with quantum investors. At the company’s first-ever “Quantum Day” event on March 20, 2025, during Nvidia’s annual GTC Conference, Huang tried to mend fences after his January comments—where he’d pegged useful quantum computing 15 to 20 years out—sparked a brutal sell-off in quantum stocks. Comparing quantum stocks today to Nvidia’s beginning demonstrates how inflated the sector has become. Nvidia’s stock stayed below $1 for its first 17 years (1999-2016), even as revenue grew from $374 million to over $6 billion during that time. Today’s quantum companies, mostly hardware-focused with revenues between $5 million and $50 million, are far from that scale. Huang’s attempt to clarify his stance, however, backfired. As reported by CNBC on March 21, 2025, stocks like D-Wave tanked 18%, Rigetti Computing and IonQ each dropped over 9%, and the Quantum Defiance ETF (QTUM) fell 2% on Thursday, reflecting a market that’s trading on raw emotion—a boom-and-bust cycle like a trading floor on steroids and meth, with euphoric highs one day and panicked crashes the next.
The quantum market’s volatility is a high-wire act with no net. Public quantum stocks have surged as much as 3,000% in early 2025, only to shed over half their gains in weeks. Rigetti Computing, branded a “meme stock” by some market commentators, has seen weekly swings of over 100% up and 70% down, often with no company news or revenue shifts to justify the churn. These hardware firms, with top revenues under $50 million, are being valued on a promise—quantum computers that can tackle high-dimensional chaos, like real-time risk models or supply chain snarls, which classical systems struggle to handle. But that promise isn’t deployable today for most companies who could benefit. Firms like D-Wave, IonQ, and IBM are seeing revenue from case studies and releasing news about pilot projects as businesses test quantum’s potential, but this isn’t widespread adoption—it’s experimental, a proof-of-concept phase more about learning than transforming.
Huang’s latest comments, as highlighted by CNBC, “did not appear to help the case for quantum stocks”–revealing a deeper issue: the market doesn’t fully grasp what the “case” is for quantum stocks. Needham analyst N. Quinn Bolton noted that Huang’s suggestion about quantum’s branding was a “contested” point at the event. Huang argued quantum computing is poorly positioned by being marketed as a “computer,” setting unrealistic expectations, when it’s better seen as a specialized tool working alongside classical systems. He’s right—quantum’s strength lies in complementing classical systems for specific, complex tasks, not replacing them wholesale. But this nuance is lost on a market that thrives on binary narratives: either quantum is the next big thing, or it’s a bust—and it’s a trillion dollar thing, but only for certain companies.
Software-side quantum companies should be a steadier trade, especially with Post-Quantum Cryptography (PQC) meeting a real need today. PQC secures data against future quantum decryption threats—a critical issue as hackers hoard encrypted data, waiting for quantum to unlock it. SandboxAQ, with its recent $5.6 billion valuation, is a prime example, focusing on algorithms and PQC to deliver quantum-safe solutions for industries like finance and healthcare. Yet the market’s not rewarding this logic consistently. Arqit Quantum Inc., another player in quantum-safe encryption for networked devices, has seen revenue drop from $7 million a few years ago to under $1 million in 2025, despite NIST’s 2024 PQC standards making such solutions a priority. The market’s punishing some firms that should be thriving, showing how quantum investing often chases hype over tangible value.
Venture capital is fueling the fire by betting big on hardware. Crunchbase Daily reported on March 12, 2025, that two quantum startups raised $400 million in weeks, part of a record-breaking 2024 for VC-backed quantum ventures, likely driven by 2024 breakthroughs from Google and IBM. VCs are hunting the next Nvidia, but they appear to be using shotguns rather than scoping targets. I believe McKinsey’s $1.3 trillion quantum value projection by 2035 is more likely low than unreasonably high—but only for firms with the talent to execute. Here’s the disconnect: without precise algorithms, quantum hardware is a shiny toy with no play. Algorithmists—the scarce experts who turn quantum theory into solutions—are in short supply, with fewer than 1,000 quantum PhDs globally. Yet VC cash keeps flooding into hardware, sidelining software where PQC delivers a clearer ROI today. Firms like SandboxAQ, building on NIST’s standards, are creating real value now, while hardware bets remain tied to experimental pilots and case studies, a speculative gamble on a future that’s still taking shape.
Leaders and investors need to see through the haze: hardware has a role in testing quantum’s potential today, but it’s not ready for broad deployment, while software’s value is here now, and will be even more critical as hardware progresses. The market’s obsession with hardware—and its misreading of quantum as a replacement, not a complement to classical systems—overlooks the algorithms that will define quantum’s future. Back both the coders and the machines with a strategy rooted in understanding what quantum really promises—not the FOMO fueling today’s hype—and you might ride the next surge to real and sustainable gains.
