Investors looking for the next big technology trend may want to keep an eye on quantum computing stocks. The group skyrocketed Tuesday after Google announced Willow , a chip it said “can reduce errors exponentially as we scale up using more qubits” and performed better than its 2019 predecessor. A qubit, or quantum bit, is a unit used to encode data in such computers. GOOGL 5D mountain Alphabet pops for a second day after Willow launch As parent-company Alphabet touted the news as a big win for quantum computing, shares of the search giant rose 4% Wednesday, building on a nearly 6% gain in the previous session. The breakthrough from Google lifted other quantum computing stocks , including little-known contender Rigetti Computing . Shares surged to new highs during Wednesday’s session after soaring 45% Tuesday . The stock, up more than 550% year to date, hovered near the flatline during midday trading. Optimism in the sector also lifted the Defiance Quantum ETF about 2% Tuesday. Some of its top performers this year include MicroStrategy and D-Wave Quantum , up 538% and 355%, respectively. Other holdings Nvidia , Coherent , IonQ and RadNet shares have more than doubled. Quantum computing is no new phenomenon, but it is gaining importance as larger and larger swaths of data are processed to train large language models. At the same time, investors are eager to jump on the next iteration of generative AI. Ever since ChatGPT set off the AI craze two years ago, investors have hunted for the next group of stocks poised to benefit from the technology’s evolution. EMJ Capital’s Eric Jackson called it the “next big theme” in a post on social media platform X, saying that he’s long Rigetti Computing and sees a “big opportunity” ahead for the company. While the theme has long-term potential, Harvest Portfolio Management’s Paul Meeks cautions investors from getting caught up in the excitement of the rally, noting that the real-world uses cases appear years away. Those looking to play the theme to should consider investing in megacap technology companies with other core segments, he said. “For Alphabet, it’s fine because it’s a call option on an existing good business, but for these others, pure plays, if they get driven up too much more, they probably become shorts,” the chief investment officer said. RGTI YTD mountain Shares this year The setup, he said, flashes similarities to late 2022, which sent up shares of players from Nvidia to C3.ai . However, over time early leaders are emerging in the sector. “I need to see use cases, and use cases that can be monetized,” he said. “I like the technical progress, but I wouldn’t put too much of a valuation bump on any of these just based on that announcement.”
