Institutional Investors and Hedge Funds Sent an Unmistakable Message to Quantum Computing Stocks IonQ, Rigetti Computing, and D-Wave Quantum

For the better part of the last three decades, investors have had a game-changing innovation to capture their attention and wallets. Typically, these next-big-thing trends are singular events -- but this isn't always the case.

In addition to artificial intelligence (AI) dominating headlines, investors have been privy to the advent and early stage proliferation of quantum computing. Though AI stock gains have been impressive, many can't hold a candle to the trailing 12-month (TTM) returns of pure-play quantum computing stocks IonQ (NYSE: IONQ), Rigetti Computing (NASDAQ: RGTI), and D-Wave Quantum (NYSE: QBTS). As of mid-October, Rigetti's TTM gain was over 6,200%!

Image source: Getty Images.

While these pure-play stocks have given investors plenty of reason to be excited about the future of this technology, institutional investors and hedge funds sent an unmistakable (and decisively sour) message to shareholders of IonQ, Rigetti, and D-Wave.

Quantum computing is a potential trillion-dollar opportunity

Big numbers tend to get investors excited. If three- and four-digit TTM percentage returns didn't do it, the addressable potential for quantum computers likely did. Analysts at Boston Consulting Group foresee this technology creating $450 billion to $850 billion in global economic value by 2040. Meanwhile, online blog The Quantum Insider has an even more optimistic ceiling of $1 trillion in global valuation creation for quantum computing by 2035.

Even if these estimates prove too lofty, there's no denying the long-term potential of this technology or the high-ceiling addressable market it entails.

Quantum Computing 1 Year Returns 🤯$RGTI +6,217% $QBTS +3,912%$QUBT +2,798%$IONQ +670% pic.twitter.com/tzSN5ZqVjj

-- Connor Bates (@ConnorJBates_) October 13, 2025

Investors have been enamored with the real-world use cases of quantum computers. While this is by no means a comprehensive list, the most exciting applications include the accelerated training of AI algorithms, the improvement of cybersecurity platforms, and running molecular interaction simulations to improve the drug development process.

We've also witnessed some very early stage wins for IonQ, Rigetti Computing, and D-Wave Quantum. For instance, Amazon's quantum cloud service (known as Braket) provides clients with access to quantum computers from IonQ, Rigetti, and D-Wave. Braket customers are using the service to run simulations and test their quantum hardware.

But perhaps the biggest catalyst for quantum computing stocks over the last year is the prospect of significant outside investment. In mid-October (i.e., when pure-play stocks went parabolic), JPMorgan Chase unveiled its $1.5 trillion, 10-year Security and Resiliency Initiative. America's largest bank by total assets highlighted 27 sub-areas for financing and/or investment -- quantum computing among them.

While sustained triple-digit sales growth is expected for IonQ, Rigetti, and D-Wave for the foreseeable future, newly released data shows that Wall Street's professional investors are losing faith in this trio.

Image source: Getty Images.

Institutional investors and hedge funds are foreshadowing trouble for quantum computing stocks

No later than 45 calendar days following the end of a quarter, institutional investors and hedge funds with at least $100 million in assets under management are required to file Form 13F with the Securities and Exchange Commission. A 13F allows investors to track which stocks Wall Street's top money managers bought and sold in the latest quarter (in this instance, the fourth quarter).

What's telling about the latest round of 13Fs is how professional investors approached high-flying quantum computing stocks.

According to 13F data aggregated by WhaleWisdom.com, the percentage of outstanding shares held by institutional investors and hedge funds fell for all three pure-play stocks:

• IonQ: From 57.35% (Q3 2025) to 54.71% (Q4 2025)
• Rigetti Computing: From 50.71% (Q3 2025) to 48.45% (Q4 2025)
• D-Wave Quantum: From 53.94% (Q3 2025) to 48.76% (Q4 2025)

Something worth noting is that the aggregate number of shares held by 13F filers actually rose for IonQ during the fourth quarter, but declined for Rigetti and D-Wave. The reason institutional investor and hedge fund ownership still fell for IonQ has to do with its $2 billion equity offering in October, which ultimately diluted existing shareholders.

Since quantum computers are still in the very early innings of commercialization, IonQ, Rigetti Computing, and D-Wave Quantum are reliant on dilutive share offerings to raise capital. Until their respective operating models are proven, this trio is likely to have limited access to traditional financial services, such as loans and lines of credit.

The stock market's savviest investors may also be turned off by historical precedent.

On the one hand, every game-changing technology for three decades has navigated an eventual bubble-bursting event. These bubbles form because investors overestimate how quickly a game-changing technology will be adopted and/or optimized by businesses. There's currently little evidence that quantum computers are being broadly adopted, and it'll likely be years before they're more cost-efficient than classical computers for practical problem-solving. In other words, the puzzle pieces are firmly in place for a bubble-bursting event to take place.

The other historical issue is that IonQ, Rigetti Computing, and D-Wave Quantum are trading at truly stratospheric TTM price-to-sales (P/S) ratios. History has taught us that TTM P/S ratios above 30 for companies at the forefront of next-big-thing trends often indicate the presence of a bubble. Even with sustained triple-digit sales growth, pure-play quantum computing stocks won't dip below this arbitrary threshold anytime soon.

The 13Fs of institutional investors and hedge funds send a very clear message: quantum computing pure-play stocks are a long way from being viable investments.

JPMorgan Chase is an advertising partner of Motley Fool Money. Sean Williams has positions in Amazon. The Motley Fool has positions in and recommends Amazon, IonQ, and JPMorgan Chase. The Motley Fool has a disclosure policy.