Quantum computing stocks went bonkers in Q4 2024, spurred on by Alphabet’s (GOOGL, GOOG) Quantum AI subsidiary announcing the “Willow” chip. We discussed the breakthroughs related with that here: Best Quantum Computing Stocks of 2025 – Google Stock’s BIG BREAKTHROUGH
But today, let’s take a look at some conversation surrounding Nvidia (NVDA) quantum computing during the GTC developer event. CEO Jensen Huang doused quantum startup stocks with some cold water in January 2025 when he voiced his opinion that an economically useful quantum computer was 15 to 20 years away. And then suddenly, Nvidia is hosting its first ever “Quantum Day” at GTC in March 2025? What’s up with that?
Quantum computing – a top industry for Nvidia data center system sales?
As we’ve discussed in past research notes, Nvidia’s computing systems for data centers (Hopper since 2022, Blackwell in full production in 2025) are used for cutting edge research and advanced AI training. Those systems tend to get “retired” after a couple of years for AI inference (or put simply, operating the AI after it’s been trained).
At this point, quantum computing research and development is very much an area of cutting-edge research. It is a data center problem, as researchers are accessing advanced supercomputers via the cloud and on-premeses data centers to advance the viability of quantum mechanics.
It should come as no surprise, then, that a chunk (unknown how much) of Nvidia’s “Data Center” revenue segment is coming from the quantum computing industry.
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This is exactly why Nvidia hosted its “Quantum Computing Day” at GTC. After Jensen trampled on his quantum computing customers’ party early in the year, a peace offering was made by discussing the present and future of this computing tech.
Jensen was joined on stage by IonQ (IONQ), D-Wave Quantum (QBTS), Rigetti Computing (RGTI), and a few privately-held companies (including Quantinuum, subsidiary of Honeywell (HON)). No Quantum Computing Inc. (QUBT) at this particular show. Perhaps they were busy with their earnings report, which wasn’t received so well by investors the week of GTC?
Is Nvidia the best quantum computing investment?
Besides the publicly-traded startup stocks, Nvidia works with dozens of the privately-owned quantum R&D companies (they should remain private, we’ll address that shortly). When you hear about these companies’ research budgets and R&D projects with government agencies and academic institutions, a fair amount of this quantum spending is going straight to Nvidia’s coffers.
Besides the private startups, here is our basic list of quantum startup stocks, including Skywater Technology (SKYT) and its chip fab services for companies engineering quantum chips.
The problem with these companies, though, is they still have a long runway of losses ahead of them – regardless of their reported breakthroughs in developing quantum computers and algorithms. That’s a red flag to be aware of for would-be quantum stock investors.
Nvidia, on the other hand, is getting to participate in this R&D, and it’s highly profitable right now. In fact, Nvidia announced it’s building a new research center outside of Boston that will house a few of its newest Blackwell computing systems, available for quantum researchers to make use of. https://nvidianews.nvidia.com/news/nvidia-to-build-accelerated-quantum-computing-research-center
Is Nvidia developing quantum hardware?
Truth be told, Nvidia itself isn’t developing any hardware for quantum computers. However, as researchers tinker with quantum chips, networking, and sensors that can take quantum mechanical measurements, they need to run countless simulations on how the hardware will operate before they have it manufactured. This is one area Nvidia’s data center GPUs can help.
Google and its Willow chip announcement late in 2024 was an admission that there’s still a lot of work to do in this department. The hardware still isn’t ready yet. And besides that, quantum algorithms need to be defined and developed, software that runs quantum problems needs to be developed, and quantum computer error correction (mitigating errors in measuring quantum mechanical effects) has to be further refined.
Nvidia GPUs are thus acting as an accelerator throughout this R&D process. GPUs can run the simulations, act as a control unit for quantum hardware and do the error corrections. And in true Nvidia fashion, there’s a library of CUDA-based software tools for developers to help with the development of the ultimate quantum software.
The question investors always need to ask when researching a new emerging industry is, who will accumulate the most profit during the R&D phase? The existing semiconductor industry supply chain is forming the foundation for a possible quantum future. That virtuous cycle of next-gen hardware development is powering work into new computers and hardware. Quantum computers could eventually be another type of existing “compute accelerator,” much like Nvidia GPUs have become today. And along the way, Nvidia is gobbling up all those quantum R&D budgets moving through the semi supply chain. We’re happy with Nvidia being our big “quantum bet.”
Is there an emerging leader among the quantum startups?
Nevertheless, we do understand the desire to invest early in quantum technology, before it really takes off. There are some pitfalls to be aware of, though, even if there appears to be an early leader emerging in the quantum R&D race – IonQ.
IonQ has been scaling up its trapped ion quantum computers and making them available via multiple cloud services. The “first publicly traded quantum pure-play” company has also made multiple acquisitions in recent years since its SPAC IPO in 2021. But IonQ operates at a steep loss. How is it paying for its research and acquisition of smaller peers?
We talked about the appropriately named “ATM” (at-the-market) equity offering plans when doing our deep dive on Rocket Lab (RKLB) last week: . IonQ has had a similar program, giving it the ability to issue and sell new stock onto the public markets. It just wrapped up this ATM program in March, raising over $370 million in cash (but also diluting existing shareholders in the process). The ATM program has now been terminated, giving IonQ about five to six years-worth of cash at the current rate of free cash flow (FCF) losses.
For now, IonQ seems to be done diluting shareholders. But with no guarantee it will win the quantum race and with cash losses ongoing, more dilution (via stock issuance for more acquisitions, for example) could crop up.
There’s another problem, though. IonQ is growing fast. But revenue was a mere $43 million in 2024. Compare this to an enterprise value (or EV, market capitalization minus net cash and short-term investments) of over $4 billion – even after the stock recently took a beating from all-time-highs. That’s an EV-to-sales multiple of over 100x! There’s historical precedent for this type of valuation not holding (like Snowflake circa 2021?).
Long-term investors, be mindful of this valuation! IonQ could emerge as a winner in a quantum computing future, but strap in for a long wait. The stock will be highly volatile in the meantime, so don’t rush to YOLO into this one in the hopes it will make you an overnight millionaire. The stock price could just as easily turn against you at these levels, given where we’re currently at in the quantum computing R&D cycle. Until then, Nvidia’s profitable R&D-enabling data center systems are raking in the chips.
