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Don’t be a raccoon investor. Raccoons are easily distracted by shiny objects. They see something glittering in the dirt and waddle over like they’ve discovered a diamond.
Right now, the shiny object raccoon investors are jumping on is quantum computing.
This week, quantum made headlines when President Trump signed two new executive orders. One directs federal agencies to help deliver a scientifically useful quantum computer by 2028. Another pushes the government to protect its systems from future quantum attacks.
This is on top of the $2 billion in funding grants the White House announced for nine US quantum computing companies earlier in May.
This is all fine and good and will push forward the science. But it’s not a signal to buy quantum computing stocks.
Quantum, for now, is overrated. The first great quantum computing company probably hasn’t even been founded yet.
I’m writing about this today because I see a lot of investors getting distracted from the main prize. In normal times, getting distracted might cost them a few thousand dollars.
But you simply cannot afford to be distracted from artificial intelligence (AI) right now. Millions of dollars are on the line, depending on the size of your portfolio.
The right small AI stocks are minting money. Times like this don’t come around often.
Don’t get me wrong. I believe in quantum computing.
Quantum computing is real science. It could one day help us design better drugs… discover new materials… optimize complex systems… and solve problems today’s best supercomputers can’t touch.
But “one day” is the key phrase.
A useful quantum computer is still years away. Probably a decade-plus.
While your laptop thinks in bits, quantum computers use qubits. IBM’s (IBM) biggest superconducting chip has 1,121 qubits. Atom Computing has made a 1,225-qubit machine.
Impressive, yes. But to do something commercially useful at scale, like cracking modern encryption or simulating complex drug molecules, we likely need 100,000 to a few million working qubits.
There’s also the problem of errors. Qubits are incredibly fragile. Heat, vibration, radiation, and tiny disturbances can knock them off course.
That means quantum computers need lots of extra qubits just to check and correct mistakes.
Then there’s speed. For most everyday tasks, regular computers are still faster. And once you include all the extra work needed to prevent errors, a single quantum step can be much slower than a normal computer step.
For now, quantum computers are specialized machines for specialized problems. Potentially world-changing problems, yes. But they won't replace your laptop, run your email, or replace GPUs in AI data centers anytime soon.
I’m not touching quantum stocks.
IonQ (IONQ) has a market value of around $20 billion. D-Wave Quantum (QBTS) is valued at around $8.5 billion, while Rigetti Computing (RGTI) checks in at $6.5 billion. And Quantum Computing (QUBT) has topped $2 billion.
Altogether, these four companies are worth about $37 billion.
That would make sense if quantum computing was a large, fast-growing commercial market. It isn’t. Grand View Research estimates the entire global quantum computing market made just $1.6 billion in revenue last year.
And much of that isn’t “useful quantum computers solving useful problems.” It mostly consists of consulting, research contracts, government funding, and early experimentation.
In other words, public quantum stocks are being priced as if the business breakthrough is close.
Look, nobody loves when tech and business come together to create big breakthroughs that help millions of people more than me. That’s when stocks soar.
I’ll be the first to let you know when that’s the case for quantum. For now, it’s not.
Instead…
FOCUS!
On AI.
Maybe I’m projecting a little. In my younger days, I was a raccoon investor. I’m extremely curious and always wanted to move on to learning about the next big breakthrough.
I’m still curious, but I channel that to other places now. I started making a lot more money in markets when I learned to focus on the megatrend of the day.
AI is clearly and emphatically the megatrend of today.
If you want to see where the biggest AI opportunities are headed next, join me in The Jolt. Here’s how to sign up.
Related: Selling AI Too Soon Could Be Costliest Investing Mistake of This Decade