Quantum computing stocks have seen massive growth, with some rising by up to 3,170% over the past year. However, investors should be cautious as these pure-play stocks are far from maturity and commercialization. The market’s high expectations for quantum computing may lead to a bubble that will eventually burst.
Several factors contribute to this hype: partnerships, financing, and “FOMO” (fear of missing out). While the technology has potential use cases in AI, drug development, cybersecurity, weather modeling, and investment portfolios, it’s still in its early stages. Few businesses have optimized quantum computing services, and it’s unclear if they’re generating positive returns on investments.
Valuations are also a concern. The price-to-sales ratio for these stocks is higher than what was seen during the dot-com bubble. Even with triple-digit annual sales growth, the valuations may not be justified. History shows that premium valuations lead to declines in the S&P 500.
Investors should consider alternative options, such as joining Stock Advisor’s top 10 list, which has produced a market-crushing outperformance compared to the S&P 500.
Source: https://www.nasdaq.com/articles/opinion-biggest-bubble-wall-street-right-now-and-im-not-talking-about-artificial