Quantum Computing Stocks Face an Underestimated Threat—And It's Not What You Think

The quantum computing boom is real, but investors are sleeping on the biggest danger lurking behind the hype.

Over the past year, quantum computing pure-play stocks have delivered mind-bending returns. IonQ climbed 90%, Rigetti Computing surged 1,860%, D-Wave Quantum rocketed 1,530%, and Quantum Computing Inc. jumped 385%—putting the Nasdaq Composite’s 20% gain to shame. The excitement is justified: quantum computers can solve problems classical computers can’t touch, and the global economic impact could reach $450 billion to $850 billion by 2040, with some projections hitting $1 trillion by 2035.

Brand-name endorsements from Amazon, Microsoft, and JPMorgan Chase’s October investment announcement fueled the rally. But here’s the catch: these same corporate giants may soon become the biggest threat to pure-play quantum companies.

The Real Competition Is Already Here

While IonQ, Rigetti, D-Wave, and Quantum Computing Inc. were building quantum computers, tech behemoths were quietly doing the same thing.

In December 2024, Alphabet unveiled Willow, its quantum processing unit, posting calculations 13,000 times faster than classical supercomputers. Microsoft followed with Majorana 1, designed to scale to 1 million qubits with significantly reduced errors. These aren’t theoretical projects—they’re production-ready systems developed by companies drowning in cash and desperate for the next big market opportunity.

The problem? IonQ, Rigetti, and their peers lack the financial cushion, operational scale, and ecosystem lock-in that Amazon, Microsoft, and Alphabet possess. These tech giants can absorb losses, outspend competitors, and force smaller players into irrelevance. Competing against them with ongoing cash burn and no established revenue streams is a losing battle.

Beyond the Obvious Red Flags

Everyone knows quantum computing stocks trade at absurd valuations—price-to-sales ratios many multiples above historical bubble indicators. Everyone expects hype to eventually deflate as the technology faces real-world commercialization challenges.

But the existential risk comes from vertical integration. Once Alphabet, Microsoft, and Amazon perfect their quantum systems, they won’t need IonQ’s hardware—they’ll use their own. And they’ll offer it at scale across their cloud platforms, crowding out the specialists who got there first.

What This Means for Your Portfolio

Quantum computing is genuinely transformative technology with genuine applications. The problem is knowing which players will still be standing when the dust settles. Pure-play quantum stocks are first-movers with impressive technology, but being first doesn’t guarantee survival when the Magnificent Seven decide to go all-in on an emerging market with a multi-trillion-dollar ceiling.