Quantum computing technology became a hot investing topic toward the end of 2024. After Alphabet (GOOG -1.14%) (GOOGL -0.98%) last month unveiled its Willow quantum computing chip, which is significantly less error-prone than earlier iterations of the technology, investors flocked to the shares of companies that focus solely on quantum computing. Prices for those stocks surged.
However, all of that optimism seemed to evaporate after Nvidia (NVDA -3.00%) Chief Executive Officer Jensen Huang commented about the outlook for quantum computing during a question-and-answer session at the Consumer Electronics Show (CES) in Las Vegas.
Useful quantum computing is still a long way away
So how did Huang single-handedly cause a whole corner of the tech market to crash?
He asserted that useful quantum computing -- think of quantum computers as super supercomputers -- was probably two decades away. Clearly, this isn't what investors wanted to hear, especially from a CEO with his finger on the pulse of the computing industry. That's just too long for most individual investors, which is why quantum computing stocks sold off sharply.
Investors shouldn't be surprised by that timeline, though. Although quantum computing stocks have gained popularity from time to time, Google's Willow chip announcement reinvigorated interest in the technology. The chip took just five minutes to perform a benchmark computation for quantum computers that would have taken 10 septillion (that's 1 followed by 25 zeros) years for a standard supercomputer to complete. However, it's important to recognize that this particular test was somewhat stacked in Willow's favor, because it involves random circuit sampling, an unusual type of problem that's well suited to the unique attributes of quantum computers.
Image source: Google.
It may be an extremely difficult test, but it's not very broadly useful. The chart above suggests that quantum computing is still far from commercial relevance and usefulness, which backs up Huang's assertion.
However, not all quantum computing CEOs agree.
D-Wave Quantum (QBTS -5.41%) CEO Alan Baratz called Huang's comments "dead wrong." Although he acknowledged that Huang might be correct when it came to gate-based quantum computing, he said his company's annealing approach to quantum computing can be deployed right now. Even so, D-Wave isn't seeing a ton of success: In Q3, its revenue decreased 27% year over year to $1.9 million.
Investing in the future of computing
So, what should investors do about quantum computing?
Unless you're prepared to hold pure-play quantum computing stocks like IonQ (IONQ 6.88%) or Rigetti Computing (RGTI -11.06%) for more than a decade, you may be better off either staying on the sidelines when it comes to this part of the tech sector, or getting your portfolio exposure to it by investing in large companies that have some investments in quantum computing.
Buying shares in Alphabet would be a great strategy because it would let you benefit from its already-successful businesses while offering the potential upsides of any quantum computing breakthroughs down the road. Alphabet is already a leader in the sector, but its stock doesn't carry nearly as much risk as quantum computing pure-plays. On the flip side, the long-term return potential for some of those quantum computing stocks is much higher.
Commercially useful quantum computing may be some time away, and that will likely sway investors away from these pure-play investments. Traditional computing still has plenty of upside, especially with the artificial intelligence (AI) boom that's going on right now. So investors would likely do better to look at something they already own rather than make a splashy quantum computing investment.
