Quantum computing stocks tumble on Nvidia CEO’s comment that they’re decades away from being “very useful”

Answering complicated math problems that would take normal computers longer than the history of the universe to solve isn’t cool. You know what is cool? Being useful and making money.

And, according to Nvidia CEO Jensen Huang, that period might be far off for quantum computing companies. The era of “very useful” quantum computers is likely about 20 years away, he said on Tuesday, remarks that are fueling a significant retreat in shares of companies that soared in December amid burgeoning interest in the industry.

Smaller, speculative quantum computing stocks that got crushed on Tuesday are getting rinsed again in the premarket on Wednesday, with Rigetti Computing, IonQ, D-Wave Quantum, and Quantum Computing off double digits.

Evercore analyst Mark Lipacis asked the following during Nvidia’s chat with the sell side at CES:

“Jensen, you guys have made some announcements on quantum computing. Can you share with us your view on how this technology develops over time, what your strategy is? And longer term, pick the time frame, 5, 10, 15 years, what is the difference between what quantum computing will be doing versus the accelerating computing platforms that you have? Thank you.”

Some excerpts from Huang’s response:

“Sure. Quantum computing can’t solve every problem. It’s good at small data, big combinatorial computing problems. It’s not good at large data problems. It’s good at small data problems, and the reason for that is because the way you communicate with a quantum computer is microwaves, and it’s— Terabytes of data is not a thing for them. And so just working backwards, there are some very, very interesting problems that you could use quantum computers for. Truly generating a random number, cryptography...”

“We’re not offended by anything around us, and we just want to build computers that can solve problems that normal computers can’t. And so in the case of quantum computing, it turns out that you need a classical computer to do error correction with the quantum computer, and that classical computer better be the fastest computer that humanity can build, and that happens to be us. And so we are the perfect company to be the classical part of classical quantum. And so we are working with — just about every quantum computing company in the world is working with us now...”

“If you kind of said 15 years for very useful quantum computers, that would probably be on the early side. If you said 30, it’s probably on the late side. But if you picked 20, I think a whole bunch of us would believe it. But what we’re interested in is we want to help the industry get there as fast as possible and to create the computer of the future, and we’ll be a very significant part of it.”

Now, Huang isn’t a completely neutral arbiter here. Quantum computing may have a symbiotic relationship with Nvidia for now, but this could eventually develop into a more competitive one. However, it’s safe to say that management at “just about every quantum computing company in the world” that’s working with Nvidia is annoyed by Huang’s comments that they’re probably two decades away from reaching a point of being “very useful.”

These remarks may be even weighing on the megacap that’s seemingly got a head start in this space. Alphabet, which made a well-publicized computational breakthrough in early December that accelerated interest in quantum computing stocks, is off about 1 percentage point more than the Nasdaq 100.