We recently compiled a list of the Jim Cramer Talked About These 9 Nuclear Power and Quantum Computing Stocks. In this article, we are going to take a look at where D-Wave Quantum Inc. (NYSE:QBTS) stands against the other nuclear power and quantum computing stocks.
Jim Cramer, host of Mad Money, recently cautioned investors about the risks of speculating in sectors like nuclear power and quantum computing, suggesting it could take a long time before these fields generate meaningful returns. While Cramer acknowledged the optimism that accompanies the start of each new year, he pointed out that sometimes the enthusiasm surrounding certain industries is misplaced.
“This year, I see two themes that I want to caution people about: nuclear power and quantum computing. Both have promise, someday, but that day is not, just not near enough to justify the current valuations for these stocks.”
He clarified that while he does not view quantum computing as a hoax, he considers the current expectations surrounding the technology to be overly ambitious. The market, according to Cramer, is setting a low bar for progress in this area.
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“Look, I believe in nuclear power, but when GE Vernova, the company that arguably has the most to gain from it, says discouraging things about an uptick in commercial nuclear power coming any time soon, when quantum computing seems very much in its infancy, well, I fear people will get hurt speculating on even the biggest companies, let alone the smaller ones.”
The outlook for quantum computing became more uncertain last week when Nvidia CEO Jensen Huang stated that “very useful” quantum computers are at least a decade away. During a Q&A at Nvidia’s Consumer Electronics Show Financial Analyst event, Huang suggested that 15 years might be an optimistic estimate, while 30 years could be more realistic. This timeline left little room for optimism among investors who had hoped for quicker breakthroughs.
Cramer acknowledged the speculative nature of these sectors but advised investors to be cautious and realistic about the potential for short-term gains.
“You can speculate of course, but please understand that, like at all New Years, the animal spirits are in play for a few stocks and I don’t want you to be trampled by wayward bulls with visions of riches in front of their greedy eyes. You own Rigetti?… Take some gains and then go out and buy yourself a nice cashmere sweater.”
Our Methodology
For this article, we compiled a list of 9 stocks that were discussed by Jim Cramer during the episode of Mad Money on January 2. We listed the stocks in ascending order of their hedge fund sentiment as of the third quarter, which was taken from Insider Monkey’s database of 900 hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A modern computer datacenter, running an advanced quantum computer system.
D-Wave Quantum Inc. (NYSE:QBTS)
Number of Hedge Fund Holders: 6
Cramer expressed skepticism about D-Wave Quantum Inc. (NYSE:QBTS) as he remarked:
“I am wary of D-Wave Quantum, a $2.2 billion company with $9 million in revenues over the last 12 months and very big losses.”
D-Wave Quantum (NYSE:QBTS) offers quantum computing systems, software, and services, including the Advantage quantum computer and the Leap cloud platform. It also provides D-Wave Launch, a service to assist enterprises in implementing quantum solutions. The company’s financial performance has been challenging. For the third quarter of 2024, it reported a 27% decline in revenue compared to the previous year, with earnings falling to $1.9 million.
This marked a decrease from $2.5 million in the first quarter and $2.2 million in the second quarter of 2024. Alongside the revenue drop, the company’s net loss widened to $22.7 million in Q3 2024, compared to $17.3 million in Q1 and $17.8 million in Q2 of the same year. However, in response to concerns about the future of quantum computing, especially following comments from Nvidia CEO Jensen Huang, the company’s CEO Alan Baratz expressed strong disagreement.
Baratz asserted that Huang was “dead wrong” about the prospects of quantum computing, emphasizing that D-Wave Quantum’s (NYSE:QBTS) systems are already in use by companies like Mastercard and Japan’s NTT Docomo in production environments. Unlike other approaches to quantum computing, such as the gate-based model, which Baratz acknowledged might take decades to be fully realized, D-Wave’s annealing approach can be applied today to benefit businesses in real-world operations.
Overall QBTS ranks 7th on our list of the nuclear power and quantum computing stocks Jim Cramer recently talked about. While we acknowledge the potential of QBTS as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than QBTS but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.