Quantum computing stocks have surged in recent years, but their valuations may be unsustainable. Historically, when companies on the cutting edge of a new technology peak at high price-to-sales (P/S) ratios, they often experience significant declines.
The current P/S ratios for pure-play quantum computing stocks are significantly higher than their historical counterparts. For example, IonQ’s P/S ratio is 273, while Rigetti Computing’s is 1,295, and D-Wave Quantum’s is 402. These high valuations may signal an impending reversal of fortune.
Analysts project that these companies’ P/S ratios will decline to between 69 and 352 by the end of 2027, which is two to 10 times lower than their historical highs. This suggests that investors should be cautious when considering investments in quantum computing stocks.
In fact, a recent report from The Motley Fool’s Stock Advisor team identified the top 10 best stocks for investors to buy now, and IonQ was not on the list. Investing $1,000 in IonQ or other quantum computing stocks at this time may result in significant losses.
Source: https://www.nasdaq.com/articles/epic-reversal-coming-quantum-computing-stocks-ionq-rigetti-computing-and-d-wave-quantum