Most investors are amped up about the rise of artificial intelligence (AI), and rightfully so. However, there are other pockets of the tech sector that are flying right now and are worth covering.
One such sector that’s seen plenty of love lately is quantum computing. Most investors are aware of the big players in this space. But there are some under-the-radar plays within the quantum computing realm I think are important to touch on.
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In this article, I’m going to highlight Arqit Quantum (ARQQ) and why this is a stock investors should pay attention to.
News this past week that J.P. Morgan (JPM) is looking to make direct venture capital and equity investments in key quantum computing stocks, including Arqit, led to a sharp rally in shares of this relatively undiscovered quantum computing name.
This chart above shows just how violent the move up and down has been following this news. Now, shares of Arqit are still trading much higher than their Q1 and Q2 levels. But the roughly 50% drawdown we’ve seen in recent days may be concerning to some.
I think some of this has to do with the relatively low volume for shares of ARQQ stock. With roughly one million shares traded daily, it’s clear that only a fraction of the company’s shares are trading hands. That said, volume has been picking up as this company gets more attention, and I’d think this trend will continue.
The fact that J.P. Morgan is among the leading institutional investors stepping into the quantum computing space in a big way and tapping Arqit as a name they’re specifically calling out is good news for investors considering this stock. The question will be whether J.P. Morgan and other banks and institutional money managers choose to follow suit and add exposure to this stock over time. For now, at least, the jury remains out on this front.
In terms of Arqit’s fundamentals, it’s apparent that this company is a ways away from profitability. Indeed, that profit margin number alone is one that investors are clearly ignoring. Most who understand the quantum computing sector (at least at a high level) know that there’s going to need to be a tremendous amount of capital deployed before real progress takes hold. And while Arqit has made some interesting breakthroughs, this company won’t likely buck the spending trend we’re seeing in this space, at least not for a few years.
