FILE PHOTO: Google Quantum AI's Hartmut Neven (L) and Anthony Megrant (R) examine a cryostat refrigerator for cooling quantum computing chips at Google's Quantum AI lab in Santa Barbara, California, U.S. November 25, 2024. REUTERS/Stephen Nellis/File Photo

By Suzanne McGee

(Reuters) -Investors in pure-play quantum computing stocks are grappling to value these futuristic companies, making prices highly volatile for the latest hot trend on Wall Street.

Rigetti, IonQ, D‑Wave Quantum and Quantum Computing Inc are racing to turn quantum theory into machines that could crack problems beyond the scope of today's computers, possibly assisted by artificial intelligence.

This could revolutionize a wide range of fields from cryptography to drug discovery. Buzz around these companies has seen their shares soar by 100% or more this year alone.

"All of a sudden, it feels like science fiction has moved into the world of real technological possibility," said Sylvia Jablonski, chief investment officer of Defiance ETFs, who oversees the Defiance Quantum fund.

Steve Sosnick, chief markets strategist at Interactive Brokers, questioned whether investors are getting carried away by the technological excitement.

"What is the right price to pay for a piece of the future?" said Sosnick, who has watched the share price of Rigetti Computing soar from $1.06 a share to a recent high of $58. As of late October, it was the fourth most actively traded stock among his firm's clients, with customers trading more Rigetti shares than those of Apple or Amazon.

Rigetti shares now hover at around $38, more than 1,000 times the company's sales. By comparison, shares of AI chipmaker Nvidia trade at about 50 times sales.

While Rigetti's stock has soared, its operations remain unprofitable, its financial statements show, although a change in the value of securities it owned produced a bottom line profit in the first quarter of 2025.

Christopher Poch, CEO of Promethium Advisors, who manages portfolios for ultra-wealthy clients and families, compared how investors were valuing such stocks to being "a magic act."

"How else can you explain a company that has a $13 billion market capitalization but only $22 million in forecast revenues?" LSEG earnings consensus forecasts anticipate that Rigetti will earn $21.9 million in 2026.

While a clutch of stocks are involved in quantum computing, including IBM and technology giant Alphabet, traders have latched on to four names that have collectively been dubbed the "Quantum 4", said Art Hogan, chief market strategist at B. Riley Wealth.

Spokespeople for Rigetti, IonQ and Quantum Computing did not return calls seeking comment on their valuations. A spokesperson for D-Wave declined any comment on the company's roller-coaster stock or its outlook.

Some analysts that cover the stocks still recommend them despite the valuation. David Williams, an analyst at Benchmark Equity Research, rates Rigetti as a "buy" and last month boosted his target on the stock to $50 a share from $20.

Nevertheless, he told Reuters, "the valuation on quantum names is more of an art than science."

On Monday, B. Riley analyst Craig Ellis cut his rating on Rigetti to "Neutral", citing its "premium valuation" and concerns that the U.S. government shutdowns could create revenue headwinds. Still, Ellis boosted his price target on the stock to $42 a share from $35. On Tuesday, the stock traded at $36.43 a share, down nearly 7%.

Banks and corporate America have shown interest in the trend. Last month, JPMorgan Chase announced plans to invest up to $10 billion in strategically important sectors such as quantum computing. In September, IBM and HSBC announced that they had used quantum-based technologies to develop a new algorithmic bond trading platform. Both ignited a fresh round of fervor, as did reports last week that the U.S. government may also inject new funding into quantum computing in exchange for equity stakes.

A U.S. Department of Commerce official told Reuters in an email that it is "not currently negotiating" such arrangements.

Still, while the quantum computing stocks have posted jaw-dropping gains and a McKinsey report projects the total value of the market could top $100 billion, the technology has taken only baby steps forward and even technology investing experts remain cautious.

"It's the holy grail of computing; the use case is undeniable, and undeniably awesome," said Rick Bradt, a portfolio manager at Neuberger Berman who invests in disruptive technologies. "But there's still a lot of uncertainty about the timing."

(Reporting by Suzanne McGee; editing by Megan Davies and David Gregorio)