Adria Cimino, The Motley Fool
5 min read
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Some quantum computing stocks delivered gains of more than 1,000% last year.
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The technology has game-changing potential, and quantum companies may thrive if the economic backdrop is supportive.
Quantum computing stocks skyrocketed in 2024, with names such as Quantum Computing and Rigetti Computing surging by more than 1,000%. Investors were eager to get in on what could become the next game-changing technology, and revenue growth as well as scientific progress from some of these quantum specialists boosted optimism.
Even after those gains, it's very possible that quantum stocks will climb in the second half of this year, and here's why.
So, first, a quick note about why investors see so much potential in quantum computing. This is because this type of computing, based on quantum mechanics, makes it possible to solve problems that today's classic computers can't handle.
Quantum computing can do this by using qubits -- instead of the bits used by today's computers -- to store data. And while bits store and process data as zeros or 1s, qubits can represent a zero, a one, or both at the same time. This allows for tremendous scaling, and as a result, a problem that would take a classic computer 1,000 years to solve may take a quantum machine about five minutes.
Right now, quantum companies offer hardware and services to customers, but we're still in the early stages of development. Experts have said that truly useful quantum computers are several years away. The good news is that this means these companies have plenty of room to run when it comes to revenue growth and share price performance. It's clear that if quantum companies reach their development goals, these computers could revolutionize many industries.
All of this helped quantum computing pure-play companies climb last year. The bull market and optimism about the economy ahead offered the perfect environment for growth stocks to excel. But in recent months, concerns about President Donald Trump's import tariff plan weighed on these players. The idea was that tariffs could lead to higher prices at home, prompting customers of quantum companies to rein in their spending.
But over the past few weeks, progress in trade talks and even initial deals with the U.K. and China have made investors more optimistic about the future. And corporate earnings haven't suggested any slowdown in spending on technology -- in fact, companies continue to reiterate their commitments to such projects.
