Photo by Nicolas Arnold on Unsplash
 

Introduction
 

The quantum computing industry is expected to experience a compound annual growth rate of 36.9% between now and 2030, with an estimated 5,000 quantum computers operational by then. That being said, however, there will be bumps along the way, and January saw a sharp decline in each of the 4 pure-play constituents in our Pure-play Quantum Computing Stocks Portfolio.
 

What Is Quantum Computing?

• Computers currently operate on a binary system that is equipped with chips that use bits to perform computations, but these bits can only show a value of zero or on,e and, as a result, it takes a lot of zeros and ones arranged in specific orders for a computer to do anything. (Check out this video on Quantum Computing: 4 Things You Need to Know.)
• Quantum computers, however, operate with subatomic particles that use quantum bits (qubits) to allow the particles to exist simultaneously in more than one state, which increases processing speeds dramatically – and quicker processing speeds mean that computers can tackle more complex problems, which will improve predictive analytics, pattern recognition, and complex optimization tasks.

There are almost 200 companies primarily focused on QC Software, according to The Quantum Insider, and just over 20 companies worldwide working on QC Processors and Chips. Of those 20+ companies, only 4 companies are researching and developing quantum computers, exclusive of anything else.
 

Our Pure-play Quantum Computing Stocks Portfolio
 

All four pure-play quantum computing stocks — IonQ, Rigetti, D-Wave, and Quantum Computing Inc. — sold off heavily (-14.3%, on average) in January in general as a result of influential commentary suggesting meaningful breakthroughs may be decades away, and the effects of a broader tech-sector risk‑off environment (DOWN 16.9% according to our AI Semiconductor Stocks Portfolio of 26 constituents - see here) that weighed on their stock performances.

Below are how the above stocks, constituents in our Pure-play Quantum Computing Stocks Portfolio, performed in January, in descending order, the focus of each, their market capitalization, and specific catalysts contributing to the change in their stock price, as follows:

1. Quantum Computing Inc. (QUBT): DOWN 9.6% in January
   • Focus: specializes in photonic qubits that offer a number of key advantages over trapped ions or superconducting qubits
   • Market Capitalization: $2.2B
   • Catalysts: 
     • QUBT’s January decline stemmed from event-driven caution, sector skepticism, and dilution risk. Specifically,
       • investors grew cautious ahead of CES, a major event for tech announcements,
       • dilution concerns from filings to sell nearly 9M shares added downside pressure, and
       • a broader tech-sector risk‑off environment (DOWN 16.9% according to our AI Semiconductor Stocks Portfolio of 26 constituents - see here) weighed on QUBT, amplifying the decline.
          
2. IonQ (IONQ): DOWN 10.9% in January 
   • Focus: building a network of quantum computers accessible via the cloud using trapped-ion technology in its processing units which relies on suspending ions in space using electromagnetic fields, and transmitting information through the movement of those ions in a “shared trap”.
   • Market Capitalization: $13.6B
   • Catalysts:
     • IONQ’s January decline was driven by sector-wide de-risking plus investor concern over aggressive M&A and spending. Specifically,
       • the heavy spending and acquisition-driven strategy (e.g., the $1.8B SkyWater acquisition) raised concerns about cash burn and integration risk,
       • IonQ raised revenue guidance but simultaneously announced multiple large deals, creating uncertainty, and
       • a broader tech-sector risk‑off environment (DOWN 16.9% according to our AI Semiconductor Stocks Portfolio of 26 constituents - see here) weighed on IonQ, amplifying the decline.
          
3. Rigetti Computing (RGTI): DOWN 18.0% in January
   • Focus: specializes in superconducting qubit technology and has developed a suite of software tools and algorithms for programming and simulating quantum computations
   • Market Capitalization: $6.0B
   • Catalysts:
     • RGTI fell sharply due to execution delays, competitive shocks, and macro pressure. Specifically,
       • Rigetti Computing came under pressure after being excluded from a key DARPA quantum benchmarking contract and delaying its 108-qubit Cepheus-1-108Q system to focus on improving error rates and gate fidelity highlighting Rigetti’s technology gap versus leading quantum peers and raising questions about its long-term competitiveness and funding options in a crowded field.
       • In addition, competitive pressure intensified during the month with the announcement by IonQ announced that it had made a $1.8B acquisition to internalize chip fabrication, and this raised concerns about Rigetti’s relative positioning, and
       • a broader tech-sector risk‑off environment (DOWN 16.9% according to our AI Semiconductor Stocks Portfolio of 26 constituents - see here) weighed on Rigetti, amplifying the decline.
          
4. D-Wave Computing (QBTS): DOWN 18.9% in January 
   • Focus: specializes in quantum annealing technology
   • Market Capitalization: $7.9B
   • Catalysts:
     • QBTS fell due to sector-wide pressure plus deal-related uncertainty and dilution fears. Specifically,
       • the acquisition of Quantum Circuits and a resale filing, raised dilution and integration concern, and
       • a broader tech-sector risk‑off environment (DOWN 16.9% according to our AI Semiconductor Stocks Portfolio of 26 constituents - see here) weighed on D-Wave, amplifying the decline.

​​​​​​​Summary
 

The Portfolio went DOWN 5.0% in December with a further 14.3% decline in January.

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