Cathie Wood's Message on Quantum Computing Stocks: Wait Another 20 to 40 Years

Quantum computing stocks like Rigetti Computing (NASDAQ: RGTI), D-Wave Quantum (NYSE: QBTS), and IonQ (NYSE: IONQ) have generated some pretty spectacular gains in recent years. Other large tech giants like Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL) are also betting big on quantum and developing their own quantum systems.

These companies all believe that quantum computers could one day replace the traditional computer, which is built on bits, the smallest unit of digital information. Quantum computers are built on qubits, which are in a state of superposition and can therefore process information and search for solutions simultaneously, unlike bits, which must process information sequentially.

Cathie Wood's firm, Ark Invest, is a big believer in game-changing technologies that can be major disruptors. Ark, for instance, is a major investor in crypto and artificial intelligence (AI).

Given this interest in disruptive technologies, one would think that Ark and quantum stocks would be a natural fit. While Wood and her team are excited about the sector, they recently sent a clear message to investors: Wait another 20 to 40 years.

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A potential red flag

In Ark's Big Ideas of 2026 presentation, one slide said that while quantum is an interesting technology, it is unlikely to be disruptive for decades, due to what has so far been a slow performance curve. Ark points out that despite spending billions on research and development, Google has only managed to double the number of qubits in the quantum system it's developing once in four years.

In certain types of quantum systems, the more qubits they have, the more powerful they are. However, stabilizing the qubits can be difficult. Some researchers believe that quantum technology will not only be able to solve problems well beyond the capabilities of today's most advanced supercomputers, but could also be a better way to encrypt data than blockchain technology.

Data by YCharts.

Under the status quo, where qubits are doubled and quantum error rates are reduced by 40% every four years, quantum computing would not be useful for cryptographic decryption until 2063, Ark estimates. In Ark's most aggressive case, in which quantum companies double the qubit count in a system and reduce the error rate by 40% every two years, quantum could be useful for cryptographic decryption by 2044.

It certainly seems like quantum technology is progressing, but it's hard to know when it will reach a critical point where it can be commercialized or used for cryptographic decryption. Meanwhile, the pure-play quantum stocks trade at big valuations and generate very little revenue.

That's why I view pure-play names like Rigetti and D-Wave as very risky bets. I also think it's a red flag that Ark, which is typically so bullish on all types of disruptive technology, is essentially telling investors to pump the brakes.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and IonQ. The Motley Fool has a disclosure policy.