Quantum Computing Stocks: Separating Hype from Reality
The quantum computing space is abuzz with excitement, but Rigetti Computing’s CEO, Subodh Kulkarni, is urging investors to temper their expectations. In a recent interview, Kulkarni cautioned that it will take time for the company to achieve sustainable sales growth and profits, despite the current hype surrounding the industry.
A Reality Check
Kulkarni’s comments come on the heels of a feverish series of movements in quantum computing stocks, which have attracted momentum traders in recent months. However, the CEO emphasized that Rigetti Computing is still in the technology development mode and needs to perfect its technology before seeing material differences in sales.
The Current State of Quantum Computing Stocks
Shares of Rigetti Computing surged 48% in a single day, while D-Wave Quantum and Quantum Computing also saw significant gains. However, these stocks had fallen the previous day after Meta CEO Mark Zuckerberg expressed skepticism about the near-term potential of quantum computing.
A Long Road to Profitability
Rigetti Computing has never been profitable from its quantum chipmaking efforts, losing $45 million on a net basis through the third quarter of last year. While the company’s market cap has surpassed $2 billion, its path to profitability will be long and arduous. Kulkarni acknowledged that the company is currently in investment mode, with most of its sales coming from government contracts.
A Three-to-Five-Year Timeline
Kulkarni expects the company to start seeing material sales opportunities in three to five years, at which point it will become cash flow break-even. Profitability will follow, but the timeline is uncertain.
Wall Street’s Bullish Outlook
Despite the uncertain profit outlook, Wall Street remains bullish on the sector. Analysts point to recent technical advances as evidence of the industry’s long-term potential. However, Kulkarni’s words of caution serve as a reminder to separate hype from reality in the quantum computing space.
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