Shares of Quantum Computing Inc. (NASDAQ:QUBT) soared 1,713% last year, according to data from S&P Global Market Intelligence. As the name suggests, this is a quantum computing start-up that has benefited from the major run in this industry niche in the latter half of 2024. With the artificial intelligence (AI) bull market in full swing and recent quantum computing breakthroughs putting the technology in the limelight, investors have been all over Quantum Computing Inc. in recent months.
Here's why the stock soared over 1,000% in 2024.
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AI narrative and quantum breakthroughs
Quantum computing is an innovative way to build a computer that researchers have been trying to perfect for decades. Using the mysterious properties of quantum mechanics, quantum computers promise to make a leap forward in computer processing capabilities and help companies solve extremely complex problems that are virtually unsolvable with normal computers. With the rising computing costs of AI tools from the likes of OpenAI and big technology companies, attention has been drawn to the potential of quantum computing once again.
Quantum Computing Inc. benefited from this narrative shift in 2024. Once it was a sleepy penny stock with a market cap below $100 million until investors started to take interest in the start-up around October of 2024, with the stock building some momentum. Then it got sent into overdrive when Alphabet's Quantum AI research lab made a splashy press release around its new quantum computer chip called Willow, which it argues has made several breakthroughs to help further the sector along.
The stock run has nothing to do with Quantum Computing Inc.'s underlying business. Stock runs like this can happen with microcaps and small caps, leading to violent volatility. In fact, so far in 2025, the stock has already gone into a 40% drawdown, correcting many of the 2024 gains.
Proceed with caution when it comes to quantum computing stocks
There is a lot of hype around quantum computing stocks, not just Quantum Computing Inc. Share prices have gone up tenfold in just a few months, making any investor a pretty penny in just a short time frame.
The problem comes when looking at the actual commercial prospects of quantum computing and the financials of this business. Experts say the technology is still years away from getting commercialized, with many technical problems still to be solved. Quantum Computing Inc. is generating less than $1 million in annual revenue and has a market cap of over $1 billion. It is losing millions of dollars every quarter.
Even though the stock did so well in 2024, it is probably best for investors to stay away from Quantum Computing Inc. stock in 2025.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Brett Schafer has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
