Cathie Wood Just Bought This Quantum Computing Stock. Should You Follow Her In?

Investors have piled into quantum computing stocks, bidding their valuations up into the stratosphere. Indeed, as it offers exponentially faster computing than traditional systems, it could usher in the next wave of technological advancement.

However, one prominent investor who thinks interest in the sector is premature is Ark Invest CEO Cathie Wood, predicting that commercial viability will not arrive until at least the mid-2040s. Nonetheless, she made a surprise purchase of a top quantum computing stock, suggesting investors might want to prepare for a transition into the sector.

Cathie Wood's quantum computing stock is Nvidia (NASDAQ: NVDA).

Cathie Wood's quantum computing stock

Admittedly, most investors who bought Nvidia probably did so for its AI leadership, and Wood appears to be one of those investors. As the leading chip company right now, Nvidia is making early moves that should make it a major quantum computing company as that technology becomes more commercially viable.

To that end, it has developed CUDA-Q, code that runs across GPUs, CPUs, and QPUs (quantum processing units). It also followed that up with CUDA-Q Logical, enabling developers to use logical qubits, or quantum bits, to build fault-tolerant applications.

Additionally, its high-speed interconnect, NVQLink, can connect Nvidia GPUs directly to quantum hardware. While these are beginning steps, these applications should help connect Nvidia to the quantum computing world as interest in it rises.

Why quantum computing is probably not driving her purchase

Although knowing what Nvidia has done with quantum computing is helpful, investors should probably follow Wood's words and actions here.

Thus, investors should not assume that her company, Ark Invest, bought Nvidia for its quantum computing abilities. This approach to investing in Nvidia is probably not wrong. Despite emerging competitive challenges from companies like Advanced Micro Devices, Nvidia remains the leading AI accelerator company, and it continues to deliver eye-popping growth.

For fiscal 2027, analysts estimate 91% revenue growth and 66% in the following fiscal year. Despite that rapid growth, Nvidia trades at a 28 P/E ratio, barely above the S&P 500 average of 26. Such a valuation makes it appear undervalued, along with limited downside, even if the worst fears about an AI bust come to pass.

Should investors follow Cathie Wood into Nvidia?

Investors should probably consider following Cathie Wood's lead, but not because of quantum computing.

Although Nvidia has clearly laid the groundwork for a transition to quantum computing, Wood believes the technology is not yet commercially viable. Also, her company's trading history does not necessarily reflect a preference for long-term investing that defines the investment style of an investor like Warren Buffett.

Instead, her company frequently buys or sells stocks, sometimes holding them for only short periods. Hence, it is likely her company bought Nvidia for its market lead in AI chips, rapid revenue growth, and relatively low valuation.

Ultimately, those looking to follow Cathie Wood should probably focus on Nvidia's present core competency rather than one that is likely to appear in the future.

Will Healy has positions in Advanced Micro Devices. The Motley Fool has positions in and recommends Advanced Micro Devices and Nvidia. The Motley Fool has a disclosure policy.