Which quantum computing stock screens best according to WarrenAI?

Investing.com -- Quantum computing stocks have delivered extraordinary returns over the past year, helped by tech breakthroughs in the sector, yet WarrenAI analysis using Investing.com Pro’s metrics reveals a concerning disconnect between performance and fundamentals. Despite eye-popping gains exceeding 1,000% annually, all major quantum stocks currently trade significantly above their fair values while showing mediocre Proscores, suggesting potential overvaluation in the sector.

Major tech companies, including IBM (NYSE:IBM), Microsoft (NASDAQ:MSFT), Google (NASDAQ:GOOGL), and NVIDIA (NASDAQ:NVDA), have all made strides in quantum computing recently, but it’s NVIDIA CEO Jensen Huang’s comments that have had an outsized impact on the sector. Initially, he dismissed the technology’s near-term relevance, suggesting it was still 15 to 30 years away from practical use. However, he later reversed course, stating that quantum computing is nearing an “inflection point” and is getting close to solving real-world problems.

Is there more upside? Possibly, but investors should be cautious and selective.

Below, WarrenAI does some heavy lifting in the sector to point to the best-of-the-best in a highly valued and still speculative quantum computing arena.

D-Wave Quantum Inc. (QBTS) emerges as the relative leader in this speculative space, earning the highest Proscore of 2.05 out of 5. Analysts have set a mean price target of $18.67, suggesting modest 11% upside potential. However, the stock currently trades 49% above its calculated fair value, indicating significant premium pricing despite its sector-leading metrics. Analysts at Rosenblatt are optimistic about the company due to its unique approach to gaining exposure in the quantum space. The firm is focused on quantum annealing, a specialized branch of quantum computing that offers advantages over both classical systems and gate-based quantum computers when it comes to solving optimization problems.

D-Wave Quantum Inc. recently announced the general availability of its Advantage2 Quantum Computer, which the company describes as its most advanced and performant system to date for solving complex computational problems.

Quantum Computing Inc. (QUBT) ranks second with a Proscore of 1.83. The company boasts the most impressive one-year return in the group at a staggering 2,219%. Analysts remain optimistic with a mean target of $18.50, projecting 26% upside, though like its peers, QUBT trades substantially above its fair value estimate. Analysts at Cantor Fitzgerald are Neutral on the stock, noting that while full-scale quantum capabilities are likely years away, investor interest has already driven meaningful stock appreciation in the sector, resulting in steep valuations relative to near-term revenue and earnings forecasts.

Quantum Computing Inc. secured its first U.S. commercial sale for its quantum cybersecurity solutions with a $332,000 order from a major bank. The company also closed a private placement, raising $200 million from institutional investors.

IonQ Inc. (IONQ) holds the third position with a Proscore of 1.79. The company enjoys the most analyst coverage in the sector with seven firms tracking the stock. Current pricing sits 28% above fair value, while analysts maintain a mean price target of $47.86, suggesting potential 23% upside from current levels. Analysts at Benchmark are bullish on the company citing two major breakthroughs: it successfully used a quantum computer to simulate the most complex protein folding problem to date—a key milestone for advancing drug discovery—and completed the first known quantum simulation of neutrinoless double-beta decay, a development that could offer new insights into fundamental physics and the universe’s matter-antimatter imbalance.

In other recent developments, Rosenblatt Securities initiated coverage on IonQ, Inc. with a Buy rating and a $70.00 price target. The company also announced a strategic collaboration with Emergence Quantum to co-develop next-generation ion trap technology.

Rigetti Computing Inc . (NASDAQ:RGTI) rounds out the group with the lowest Proscore at 1.76. The stock trades 48% above its fair value, similar to D-Wave. Analyst enthusiasm appears more tempered here, with price targets suggesting just 11% upside potential to the mean target of $15.83. Analysts at B.Riley are positive on the stock, citing Quantum initiatives from governments, including the U.S.

Rigetti Computing Inc. recently reported achieving a key technical milestone of 99.5% median two-qubit gate fidelity on its modular system.

The quantum computing sector presents a paradox for investors - tremendous growth and analyst optimism contrasted with concerning valuation metrics. None of these stocks achieves a Proscore above 2.1, which would typically indicate average investment quality on Investing.com Pro’s 1-5 scale. This suggests that despite the revolutionary potential of quantum technologies, current market prices may already reflect much of the anticipated future growth.

Have more questions on the sector, ask WarrenAI yourself here: https://www.investing.com/warrenai

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.