Investing in high-multiple growth stocks with explosive momentum and upside potential is not for the faint of heart. So, if you can’t handle volatility in some of the mega-cap tech titans, you probably won’t like the ride to be had in some of the market’s more speculative hyper-growth plays. That said, if you do have disposable income and would be absolutely fine if your speculative bet went up in a poof of smoke, it may make sense to look at some of the emerging nascent technologies that could continue to advance at a rapid pace.
In any case, I think the quantum revolution is real, but it’s tough to tell when the technology will start turning a profit. Even if you’re right about quantum, you might be proven wrong as an investor if you’re too early into the game.
Further, you could still lose big money if you pick the wrong companies or if you overpay for the right ones. It’s tough to pick winners in the early stages of a new technological uprising. And while there could be explosive upside if you make the right move, there could also be significant downside risk that’s enough to sink any investment. So, do put in the homework and the analysis if you’re looking to jump into a red-hot momentum trade that could go either way.
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D-Wave looks intriguing for those who aren’t afraid of extreme volatility
Enter shares of D-Wave Quantum (NYSE:QBTS), a red-hot quantum computing company with a $11 billion market cap and a stock that’s rapidly retreating after exploding higher during the summer. Of course, the name is really hard to value since it’s not yet profitable and might not be for some time. Either way, it’s the news headlines that will be moving shares of Burnaby-based technological innovator.
With shares down around 29% from all-time highs, dip-buyers might have a second chance to put some new money to work. With the firm seeking to streamline its capital structure while continuing to keep its foot on the pedal to hit quantum milestones, perhaps earlier than expected, I’d suggest nibbling into a full position over the next two to three years to reduce the shock of any further plunges. As quantum computers enter commercialization, there’s considerable upside potential, but, at the same time, such high potential comes with the cost of considerable near-term downside risk.
At this juncture, D-Wave is one of my favourite quantum stocks to play, given its wide moat in quantum annealing (a corner of quantum computing that could hold considerable potential). At this juncture, it’s not clear which quantum approach will lead. In any case, I think D-Wave has long-term potential, especially as firms look to link quantum computing power to AI data centres. Indeed, the tech is moving fast, and that’s bound to cause booms and busts along the way.
My takeaway?
Nibble on the big dips as you seek to build a position for the next 10 years and beyond. Sure, you might forego timely upside, but, at the very least, you’ll be less emotional when the next huge slide hits. At the end of the day, it’s the long game that counts when it comes to nascent tech plays with high stakes. Personally, I’ll be sitting on the sidelines with D-Wave as well as the rest of the quantum stocks because it’s in the “too difficult to understand/value” category. If the firm becomes profitable, though, I might reconsider.
