What caught my attention is Quantum computing is an exciting new area emerging within the artificial intelligence (AI) realm.
Over the last several months, artificial intelligence (AI) enthusiasts have become intrigued by an emerging nology known as quantum computing (an important development).
Additionally, Although quantum applications are not yet operating at scale, industry re suggests the nology could be a game changer.
Management consulting firm McKinsey & Company forecasts that quantum computing could add trillions in economic value in the coming decades, signaling this nology could revolutionize the AI megatrend over the long run, amid market uncertainty.
Additionally, One company that has received quite a bit of attention in the quantum arena is Quantum Computing (QUBT -1.
However, Additionally, Quite an apos name, if you ask me, amid market uncertainty.
With s trading just below $20 as of this writing, is now a good time to scoop up s of Quantum Computing stock, in today's market environment. What's with all the hype around Quantum Computing stock.
Over the last year, s of Quantum Computing have risen by 2,480% -- handily outperforming the S&P 500 and Nasdaq Composite.
QUBT data by YCharts With such tantalizing gains, Quantum Computing's must be on a roll, right, in light of current trends. Well, not quite, in this volatile climate.
Moreover, Over the last 12 months, Quantum Computing has only generated $385,000 in revenue (which is quite significant), in light of current trends.
Meanwhile, To me, the meteoric rise in Quantum Computing's price can be attributed to a number of macro-oriented narratives as opposed to anything company-specific.
Furthermore, For example, Nvidia CEO Jensen Huang has spoken favorably the spects of quantum computing on multiple occasions.
Conversely, Considering how important Nvidia's nology stack is for the broader AI narrative, investors ly find it encouraging that the visionary CEO appears bullish on the quantum computing opportunity.
Nevertheless, On top of that, some economists think an interest rate cut from the Federal Reserve could be on the horizon.
On the other hand, Diminishing rates could be viewed positively by investors, and growth stocks such as Quantum Computing would ly be particular beneficiaries of renewed investor enthusiasm.
However, Image source: Getty Images. Conversely, Assessing Quantum Computing's valuation Per the chart below, Quantum Computing boasts a price-to-sales (P/S) ratio over 5,200.
When you assess Quantum Computing from this perspective, the company's nominal revenue levels really come into focus, in today's market environment.
How can a company generating only a few hundred thousand dollars in sales achieve a multibillion-dollar market cap.
QUBT PS Ratio data by YCharts In my eyes, Quantum Computing stock is largely trading on a bullish narrative at the intersection of AI and quantum applications.
To drive how silly Quantum Computing's valuation really is, consider the ing: Dot-com bubble: During the most euphoric days of internet hype during the late 1990s, companies such as Amazon, Microsoft, and Cisco witnessed peak P/S multiples in the range of 31 to 43, in light of current trends.
Furthermore, COVID-19 bubble: In more recent history, companies such as Zoom Communications and Peloton Interactive witnessed stratospheric valuations as investors bought into the narrative that these companies would capitalize on remote work trends and the at- economy, in today's market environment.
Zoom's P/S peaked at around 124 while Peloton's high was roughly 20. Is Quantum Computing stock a buy right now.
According to recent company filings, Quantum Computing recently issued 14,035,089 s at a purchase price of $14. 25 in an effort to raise capital, considering recent developments.
Considering the company barely generates revenue and is unfitable, it was only a matter of time before Quantum Computing faced a liquidity crunch.
I see this issuance as a sign that management understands how stretched the company's valuation has become; therefore, it took strategic advantage of current inflated prices.
While Quantum Computing stock might appear cheap at $18 per, the valuation analysis explored above underscores that the company is trading well past the point of a bubble (noteworthy indeed), given current economic conditions.
Furthermore, the recent stock issuance could subtly imply that management does not believe the current valuation is sustainable (remarkable data).
To me, Quantum Computing is a highly speculative opportunity that is best avoided for now.
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors.
Adam Spatacco has positions in Amazon, Microsoft, and Nvidia (which is quite significant).
The Motley Fool has positions in and recommends Amazon, Cisco Systems, Microsoft, Nvidia, Peloton Interactive, and Zoom Communications.
The Motley Fool recommends the ing options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.