The potential payoff from quantum computing is enormous. By harnessing the principles of quantum mechanics, quantum computers can perform complex calculations exponentially faster than classical computers. Using qubits instead of the traditional binary bits of classical computers, quantum computers can process vast amounts of information simultaneously. These machines could solve complex problems in minutes that would take traditional classical computers years or even decades, with the potential to revolutionize fields including cryptography, drug discovery and multivariate mathematical modeling, among many others.
Large technology companies including IBM, Microsoft, Google and more recently Nvidia, have invested hundreds of millions of dollars in quantum computing research over the past several decades. Although commercial deployments are limited, there has been slow and steady progress that indicates quantum computing could eventually become commercially viable.
Google's Willow announcement in December1 vaulted quantum computing back into both technical and financial news headlines. Google claimed that the Willow processor provides massive performance breakthroughs while computing errors (particularly knotty technical issues with quantum computing) are reduced exponentially.
In addition to companies such as Google, IBM and Microsoft, several small companies have been working to commercialize quantum computing over the past several years, including Quantum Computing (QUBT), Rigetti Computing (RGTI), D-Wave Quantum (QBTS) and IonQ (IONQ). In contrast to the vast resources of technology giants, these companies generally exhibit a small capital base, de minimis revenues and high cash burn rates with potential insolvency in the not-too-distant future.
Primarily on the news of Google’s breakthrough Willow announcement, valuations for these companies soared as investors sought to ride the next technology growth wave in the wake of artificial intelligence (AI) and ChatGPT.
Schrödinger's Cat
"Schrödinger's Cat" is a famous thought experiment posed by physicist Erwin Schrödinger in 1935 that illustrated the conflict of quantum superposition and our traditional understanding of reality where contradictory conditions can potentially all be true at the same time. Specifically, under quantum conditions postulated by Schrödinger, a cat could be both paradoxically dead and alive at the same time.
In classical financial terms, companies with poor fundamentals, such as Quantum Computing, Rigetti Computing, D-Wave Quantum and IonQ, do not usually merit the extraordinary valuations they achieved since the Google announcement – perhaps there are quantum financial terms where paradoxical conditions of high valuations and poor fundamentals can both be true?
Jensen Huang, Nvidia's CEO, provided some clarity on January 8, 2025 during an analyst question-and-answer session:2
"If you said 15 years for very useful quantum computers, that would probably be on the early side. If you said 30, it's probably on the late side. But if you picked 20, I think a whole bunch of us would believe it."
Jensen's comments effectively "broke the flask" – revealing that poor fundamentals appeared to be the true condition for these companies.
And within hours, quantum computing companies shed much of the appreciated value gained since Google's announcement.
Important Disclosures & Definitions
1 Neven, H. (12/09/2024). Meet Willow, our state-of-the-art quantum chip. Retrieved 01/10/2025 from Google Technology Research, online blog.
2 Shaban, H. (01/08/2025). Nvidia’s 'AI Godfather' forces a reset on the tech world’s next big bet. Retrieved 01/10/2025 from Yahoo Finance online.
AAI000876 01/21/2026
