Here's a fun puzzle for you: what happens when everyone agrees a technology will change the world, but nobody can agree on when? You get the current state of quantum computing stocks, where the future looks bright but the present is getting pretty dark for the companies trying to build it.
ETF traders are increasingly placing bets against the pure-play quantum computing companies, even as the very tech giants who could eventually buy them are pouring billions into the technology's long-term prospects. It's a widening gap between short-term market sentiment and the multi-decade outlook, and it's playing out in some wild price swings.
Last week, the poster children of public quantum computing—IonQ Inc. (IONQ), D-Wave Quantum Inc. (QBTS), and Rigetti Computing Inc. (RGTI)—saw their shares erode by 13% to 15%. That's a bad week by any measure. But for a certain breed of trader, it was a great week. The decline triggered a massive surge in the niche inverse and leveraged ETFs designed to profit when these stocks fall.
The Defiance Daily Target 2x Short IONQ ETF (IONZ) jumped 34%. The Defiance Daily Target 2X Short QBTS ETF (QBTZ) gained 30%. The Defiance Daily Target 2X Short RGTI ETF (RGTZ) rose 31%. These moves aren't just noise; they show how traders are using ETFs as precise, tactical tools to bet that the valuations of these early-stage, cash-burning science projects have gotten ahead of themselves. It's a vote against the near-term pain of being a publicly traded quantum company.
The Long Game Plays On (Just Not in the Stock Market)
While the ETF traders are shorting the future, the people who actually have to build that future are doing the opposite. Take Alphabet (GOOGL). Last week, Google announced it's incorporating "neutral-atom" technology into its quantum computing strategy to improve scalability. Think of it as adding a new, more flexible tool to its existing superconducting qubit toolbox.
This isn't a pivot; it's a doubling down. By combining different approaches, Alphabet is trying to tackle the myriad challenges in quantum computing—error correction, simulations, you name it. It's investing in the entire ecosystem. And it's not alone. Peers like Microsoft Corp (MSFT) and Amazon.com Inc (AMZN) are also making massive, long-term bets on quantum. For them, the thesis is intact. The future will be quantum; it's just a question of when the checks they're writing today will cash out.
ETF Traders: We'll Believe It When We See It (In Our Lifetime)
The ETF market, however, is sending a clear signal: caution now, maybe optimism later. Analysts at UBS have described the quantum computing market's potential as high but undeniably early-stage. They believe meaningful breakthroughs are more likely in the 2030s. That's a decade away. For a trader looking at a chart from last week, a decade might as well be a century.
The recent rally in inverse ETFs indicates that a segment of the market is bracing for more near-term losses, even if the long-term outlook remains sunny. It's a bet on the volatility of the journey, not the destination.
