Why D-Wave Quantum Stock Just Crashed
Key Points
Broadcom sparked a sell-off this week, warning AI chip demand might not grow as fast as investors hoped.
D-Wave stock has little to do with AI, but is selling off anyway.
- 10 stocks we like better than D-Wave Quantum ›
I've got bad news and good news for D-Wave Quantum (NYSE: QBTS) investors today.
Bad news first: D-Wave stock is plunging 11% through 11:45 a.m. ET Friday. And the good news?
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No bad news for D-Wave stock
The good news is that there's no specific bad news behind the sell-off -- no earnings reports that missed targets, no analyst downgrades, not so much as a lowered price target on Wall Street. Instead, D-Wave stock seems to be crashing simply because everything tech is selling off today: Nvidia (NASDAQ: NVDA) shares are off nearly 5% this morning, and Bitcoin (CRYPTO: BTC) is down more than 5%. Red-hot memory company Micron (NASDAQ: MU) has already lost 7%.
Basically, what we're looking at here is just a "risk-off" day for the market.
What sparked it? The most likely catalyst stems from worries over Broadcom's (NASDAQ: AVGO) earnings report Wednesday night. Broadcom spooked investors when it warned that sales of its artificial intelligence chips will "only" triple in Q3, and not grow even faster, as analysts had hoped.
And now everyone is panicking about everything tech, quantum computing stocks included.
So, is it safe to buy D-Wave stock?
Just knowing why D-Wave stock is selling off doesn't necessarily mean it's safe to buy it, however. As a technology and as an industry, quantum computing is still in its infancy and probably years away from being a profitable endeavor.
In the case of D-Wave, analysts polled by S&P Global Market Intelligence don't expect profits to arrive as far out as analysts are willing to make forecasts (in D-Wave's case, that's 2030). Worse, D-Wave will probably burn through more than $500 million in cash before it turns profitable. Before buying today's dip, make sure to check your risk tolerance first.
Should you buy stock in D-Wave Quantum right now?
Before you buy stock in D-Wave Quantum, consider this:
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Bitcoin, Broadcom, Micron Technology, and Nvidia. The Motley Fool has a disclosure policy.
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