Quantum computing stocks proved a lucrative bet this year – but experts are convinced they’ll find it incrementally more difficult to replicate their performance in 2025.
Pure-play names like IonQ Inc , Rigetti Computing Inc , D-Wave Quantum Inc – all have seen their stock prices increase by more than tenfold over the past 12 months.
But analysts recommend that investors take profit in these names now as they are unlikely to have a particularly strong 2025.
Why did quantum computing stocks soar in 2024?
Much of the strength in quantum computing stocks in recent weeks have been related to Google’s breakthrough.
The tech titan introduced a state-of-the-art quantum chip it’s calling Willow this month that can “reduce errors exponentially as we scale up using more qubits.”
Still, Paul Meeks of Harvest Portfolio Management remains unimpressed as it’s too soon to decipher the future of these companies.
“Any kind of evidence that impacts financials is way, way, way, out in the future. What are they going to use it for and is it really a money maker? That’s going to drive the results and valuation,” he said in a recent interview.
It’s too early to pick quantum computing winners
Paul Meeks attributes a 65% year-to-date gain in the Defiance Quantum ETF to investors’ desire to book an early position in the next big technology trend.
But he does not see it as an exciting investment proposition for the coming year as the entire debate around quantum computing is not new to the Wall Street.
In fact, talks of quantum computing among corporations first emerged as soon as a decade ago.
Meeks agreed that quantum computing could someday play a role in powering extensive data centres. But that “day”, he noted, is years, if not decades, into the future for now.
Others, including Greg Bassuk – the chief executive of AXS Investments also doesn’t expects significant breakthroughs in quantum computing in 2025.
How to invest in quantum computing?
Baird strategist Ted Mortonson also currently sees the pure-play quantum computing stocks in the “speculation overexuberance stage.”
A better way to bet on quantum computing is to invest in the mega-cap technology names, he told clients in a recent report.
When you have this huge investment cycle on next generation technology, you have to play companies that have massive free cash flow, or a monopoly in their core business.
Google-parent Alphabet Inc falls in that category as it’s working on a new quantum chip but offers ample exposure to artificial intelligence and a high-margin advertising business as well.
Google stock is up 50% versus its year-to-date low at writing.
Unlike pure-play quantum computing stocks, shares of this tech behemoth pay a dividend yield of 0.41% as well that makes them all the more exciting to own for the long term.
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Avago, Vector Acquisition lead Thursday's market cap stock movers
Thursday's market has seen notable movements among stocks across different market capitalization ranges, with significant intra-day stock movements particularly in the mega-cap and large-cap categories. Avago Technologies (NASDAQ:AVGO) and Vector Acquisition (NASDAQ:RKLB) stand out with impressive gains, while FBTC (FBTC) and MicroStrategy Inc (NASDAQ:MSTR) experience declines. Here are the highlights of some of the most dynamic stock movers, from mega-caps to small caps.
GigCapital4 (BBAI): +21.18%; YTD return grows to 74.3%
Anavex Life Sciences (NASDAQ:AVXL): +25.39%; YTD return modestly up to 16.76%
Armada Acquisition I (RZLV): +29.45%; YTD return falls to -66.95%
Gevo (NASDAQ:GEVO): +34.47%; YTD return modestly up to 30.17%
Tuscan Holdings Corp (MVST): +38.7%; YTD return rises to 30.71%
AMCI Acquisition II (LNZA): +48.13%; YTD return plunges to -68.19%
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MicroStrategy, Li Auto lead Thursday's market cap stock movers
Thursday's market has seen notable fluctuations among stocks across different market capitalization categories. Mega-cap stocks like FBTC (FBTC) have experienced declines, while certain large-cap stocks like Li Auto Inc (NASDAQ:LI) and Xpeng Inc (NYSE:XPEV) have surged, reflecting a diverse day on Wall Street. Here are some of the key stock movers from mega to small caps.
China Yuchai International Ltd (NYSE:CYD): +14.81%
AMCI Acquisition II (LNZA): +15.0%
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Sector Update: Tech Stocks Lower to Flat Premarket Thursday
Technology stocks were lower to flat premarket Thursday as the Technology Select Sector SPDR Fund was recently down 0.4% and the SPDR S&P Semiconductor ETF was inactive.
Meta Platforms has reportedly agreed to pay $1 million and reform its advertising system in Israel to resolve a class action suit alleging that Meta's tools enabled employers to discriminate against job seekers on grounds of age and gender, local media outlet Globes reported. Meta Platforms shares were 0.4% lower pre-bell.
Uber Technologies' $950 million acquisition of Delivery Hero's Foodpanda business in Taiwan has been blocked on anti-competition grounds by the country's antitrust regulator, Delivery Hero said Wednesday. Uber Technologies shares were down 0.2% premarket.
Rigetti Computing shares were down over 1%, swinging from a gain of over 3% the previous session following the launch of the company's new quantum computer.
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Tesla, MicroStrategy lead market cap stock movers on Wednesday
Wednesday's market has seen significant movements across various stocks, particularly within the mega-cap and large-cap categories. Stocks such as Tesla Motors (NASDAQ:TSLA) and MicroStrategy Inc (NASDAQ:MSTR) have shown notable rallies, while others have also made impressive gains. This article will provide an overview of today's stock movers, from the largest mega-caps to the more volatile small-caps.
Mega-Cap Movers:
Tesla Motors (TSLA): +7.36%; YTD Price Total (EPA:TTEF) Return: 86.04%
Avago Technologies (NASDAQ:AVGO): +3.15%; YTD Price Total Return: 117.61%
Wal-mart Stores (NYSE:WMT): +2.58%; YTD Price Total Return: 78.47%
Netflix, Inc. (NASDAQ:NFLX): +2.27%; YTD Price Total Return: 91.45%
Morgan Stanley (NYSE:MS): +2.1%; YTD Price Total Return: 41.22%
Large-Cap Stock Movers:
MicroStrategy Inc (MSTR): +7.81%; YTD Price Total Return: 467.08%
FBTC NYSE (FBTC): +6.48%; YTD Price Total Return: 111.4%
IBIT NASDAQ (IBIT): +6.36%; YTD Price Total Return: 111.15%
Super Micro Compu (NASDAQ:SMCI): +5.96%; YTD Price Total Return: 20.77%
Robinhood Markets (NASDAQ:HOOD): +5.55%; YTD Price Total Return: 210.68%
Reddit (RDDT): +5.22%; YTD Price Total Return: 251.72%
Astera Labs (ALAB): +4.45%; YTD Price Total Return: 128.28%
Coinbase Global (NASDAQ:COIN): +4.28%; YTD Price Total Return: 60.78%
Talen Energy Corp (TLN): +4.08%; YTD Price Total Return: 223.2%
Archer Aviation (ACHR): +15.14%; YTD Price Total Return: 75.9%
Blue Safari Group Acquisition Corp (BTDR): +14.81%; YTD Price Total Return: 138.95%
TSLL (TSLL): +14.35%; YTD Price Total Return: 164.1%
BITX (BITX): +13.3%; YTD Price Total Return: 138.45%
Hut 8 Mining PK (HUT): +12.15%; YTD Price Total Return: 82.01%
Pony Ai Inc (PONY): -9.52%; YTD Price Total Return: 8.5%
Joby Aviation (NYSE:JOBY): +8.4%; YTD Price Total Return: 24.21%
Venaxis (NASDAQ:RIOT): +8.06%; YTD Price Total Return: -24.56%
dMY Technology Group III (IONQ): +7.89%; YTD Price Total Return: 259.81%
Ikonics Corp (WULF): +7.23%; YTD Price Total Return: 159.58%
Small-Cap Stock Movers:
Exodus Movement (EXOD): +23.25%; YTD Price Total Return: 755.45%
Kulr Technology Group OTC (KULR): +20.85%; YTD Price Total Return: 1748.65%
AMCI Acquisition II (LNZA): +17.65%; YTD Price Total Return: -68.19%
M I Acquisitions Inc Unit (PRTH): +17.46%; YTD Price Total Return: 204.21%
GigCapital4 (BBAI): +16.93%; YTD Price Total Return: 74.3%
Alussa Energy Acquisition (NYSE:FREY): +16.41%; YTD Price Total Return: 59.36%
Semler Scientifc (NASDAQ:SMLR): +15.6%; YTD Price Total Return: 60.94%
PrimeEnergy Corp (PNRG): +15.3%; YTD Price Total Return: 89.19%
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Ciena Rebounds: AI and Strong Guidance Drive Post-Earnings Surge
Just as stocks can gap and crap on an earnings report, meaning the price initially gaps higher on the market open and sells off back to red during the day, stocks can also do the opposite, dump, and gap. Such was the case with leading optical networking solutions provider Ciena Co. after releasing its fiscal fourth quarter 2024 earnings.
The computer and technology sector giant’s stock initially sold off from $73.21 to $67.01 after the close but reversed course to surge up to $82.00 on the morning price gap. This price action delighted investors and panicked short sellers to cover their losses as the stock continued to surge to a high of $91.82 in the following days. Let’s examine why it reversed and what it bodes for the company moving forward.
Headline FQ4 2024 EPS Numbers and Metrics Were Worse Than Last Year
The headline numbers Ciena reported for fiscal Q4 2024 were disappointing and triggered an initial sell-off. Ciena reported EPS of 54 cents, which fell shy of consensus estimates by 11 cents. Revenue fell 0.5% year-over-year (YoY) to $1.12 billion, slightly beating consensus estimates of $1.1 billion. Its adjusted gross margin fell 210 bps to 41.6%. Operating expenses rose to $400.8 million, up from $395 million. Operating margin fell to 280 bps YoY to 5.3%.
In other words, Ciena generated fewer sales at a higher cost, making less money than last year. By all accounts, the stock sell-off was justified.
Ciena Took Control of the Narrative on the Conference Call
The stock market is always forward-looking. This holds during earnings season when companies report their past performance and provide guidance for future performance. By the time a company reports its quarterly results, they are already a few weeks into the next quarter. This is why the forward guidance is so critical. Sometimes, a company will save its forward guidance until its conference call after it explains the past quarter's results.
In Ciena’s case, the company took control of the narrative, painting an optimistic take on its FQ4 performance during the conference call.
The cloud computing recovery, growing streaming services, 5G networks, internet of Things (IoT), and artificial intelligence (AI) boom ensures data traffic will continue to increase exponentially. As such, Ciena is positioned to benefit from the increased spending on network systems upgrades and expansions. Bandwidth demand is the lifeblood of Ciena’s business, and it’s been growing 30% YoY for over two decades.
This theme was echoed by Ciena CEO Gary Smith, "Our Q4 revenue and strong order flow reflect our significant and increasing technology leadership and positive industry dynamics. As Cloud and AI drive bandwidth demand across the network, we are positioned for accelerated revenue growth and market share expansion moving forward."
Ciena Delivers the Knockout Punch With Strong Upside Guidance
Then, they proceeded to issue upside guidance for FQ1 2025 and fiscal full year 2025. Revenue for FQ1 is expected to be between $1.01 and $1.09 billion versus $1 billion consensus estimates. Fiscal full-year 2025 revenues are expected to rise 8% to 11%, or $4.34 billion to $4.46 billion, versus $4.31 billion. This is a huge leap from the 0.5% YoY revenue drop in its FQ4 2024. It signals FQ4 as a turning point.
Ciena also raised its long-term average annual revenue growth for fiscal years 2025 to 2027 to the 8% to 11% range, up from the previously expected range of 6% to 8%. The company is confident enough in its business moving forward that it provided an updated set of long-term targets driven by strong CapEx investments by its cloud provider clients, and they continue to invest in networks to help support AI training and inferencing.
AI Boom Goes Beyond the Data Center, Impacting All Areas of the Network
Ciena expected an adjusted operating margin of 15% to 16% for fiscal 2027. Ciena emphasized that AI is not just a data center phenom. Traffic is flowing out of the data center to impact all areas of the network. Providers inevitably need to upgrade their networks to Ciena's next-gen intelligent line systems. Service provider orders outpaced revenue in North America for the first time in two years in FQ4.
Ciena’s clients include the major hyperscalers like Microsoft Co. Azure, Amazon.com Inc. AWS and Alphabet Inc. Google Cloud to media giants like The Walt Disney Co. and Netflix Inc. and major telcos like AT&T Inc. and Verizon Communications Inc. .
CIEN Stock Attempts a Bull Flag Breakout
A bull flag pattern is comprised of two parts. First, the underlying stock forms the flagpole, which is a steep run-up in the stock price, usually at a 45-degree or higher angle. The flagpole completes when the stock forms its peak. The flag is formed on the parallel descending trendlines comprised of lower highs and lower lows. The bull flag triggers when the stock surges through its upper descending trendline and past the peak of the flagpole.
CIEN triggered a gap of up to $82.00 following its FQ4 2024 earnings conference call to form gap-fill levels at $73.87 and $82.00. CIEN continued to grind higher for the next two days, reaching a flagpole peak of $91.82. The flag formed on the parallel descending trendlines with a bull flat trigger on the breakout above $87.60. The daily VWAP support is rising at $80.27. The daily RSI is slowly rising at the 68-band. Fibonacci (Fib) pullback support levels are at $83.64, $79.49, $76.55, and $73.47.
CIEN's average consensus price target is $92.45, implying an 11.88% downsideand its highest analyst price target sits at $98.00. It has seven Buy ratings and six Hold Ratings. The stock has a 4.41% short interest.
Actionable Options Strategies: Bullish investors can wait for CIEN to pull back and consider using cash-secured puts at the Fib pullback support levels to buy the dip. If assigned the shares, then writing covered calls at upside Fib levels executes a wheel strategy for income opportunities while hedging the downside by the premium received.
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Tesla, Avago lead Tuesday's market cap stock movers
Tuesday's market has witnessed notable movements among various stocks, particularly in the mega-cap and large-cap categories. Stocks like Tesla Motors (NASDAQ:TSLA) and Avago Technologies (NASDAQ:AVGO) have experienced significant rallies, while others have also shown impressive gains. Here's a rundown of some of the most prominent stock movers across different market cap ranges, highlighting their intra-day stock performance.
Mega-Cap Movers (Market Cap $200B+):
Tesla Motors (TSLA): +7.36%; YTD Price Total (EPA:TTEF) Return: 73.29%
Avago Technologies (AVGO): +3.15%; YTD Price Total Return: 110.96%
Wal-mart Stores (NYSE:WMT): +2.58%; YTD Price Total Return: 73.99%
Netflix, Inc. (NASDAQ:NFLX): +2.27%; YTD Price Total Return: 87.2%
Morgan Stanley (NYSE:MS): +2.1%; YTD Price Total Return: 38.32%
Large-Cap Stock Movers (Market Cap $10B-$200B):
MicroStrategy Inc (NASDAQ:MSTR): +7.81%; YTD Price Total Return: 426.0%
IBIT NASDAQ (IBIT): +6.36%; YTD Price Total Return: 98.54%
Super Micro Compu (NASDAQ:SMCI): +5.96%; YTD Price Total Return: 13.98%
Robinhood Markets (NASDAQ:HOOD): +5.55%; YTD Price Total Return: 194.35%
Reddit (RDDT): +5.22%; YTD Price Total Return: 234.28%
Astera Labs (ALAB): +4.45%; YTD Price Total Return: 118.56%
Coinbase Global (NASDAQ:COIN): +4.28%; YTD Price Total Return: 54.18%
Talen Energy Corp (TLN): +4.08%; YTD Price Total Return: 210.55%
Vector Acquisition (NASDAQ:RKLB): +3.95%; YTD Price Total Return: 362.75%
Mid-Cap Stock Movers (Market Cap $2B-$10B):
Archer Aviation (ACHR): +15.14%; YTD Price Total Return: 52.77%
Blue Safari Group Acquisition Corp (BTDR): +14.81%; YTD Price Total Return: 108.11%
TSLL (TSLL): +14.35%; YTD Price Total Return: 130.96%
Hut 8 Mining PK (HUT): +12.15%; YTD Price Total Return: 62.29%
Pony Ai Inc (PONY): -9.52%; YTD Price Total Return: 19.92%
Joby Aviation (NYSE:JOBY): +8.4%; YTD Price Total Return: 14.59%
Venaxis (NASDAQ:RIOT): +8.06%; YTD Price Total Return: -30.19%
dMY Technology Group III (IONQ): +7.89%; YTD Price Total Return: 233.49%
BITX (BITX): +13.3%; YTD Price Total Return: 138.45%
AltC Acquisition (OKLO): +7.22%; YTD Price Total Return: 108.52%
Small-Cap Stock Movers (Market Cap $300M-$2B):
Kulr Technology Group OTC (KULR): +20.85%; YTD Price Total Return: 1429.73%
M I Acquisitions Inc Unit (PRTH): +17.46%; YTD Price Total Return: 158.99%
MSTU (MSTU): +14.48%; YTD Price Total Return: -53.52%
GigCapital4 (BBAI): +17.08%; YTD Price Total Return: 49.07%
Alussa Energy Acquisition (NYSE:FREY): +16.41%; FREYR Battery Closes Transformative Acquisition of Trina Solar's U.S. Manufacturing Assets; YTD Price Total Return: 36.9%
Semler Scientific (NASDAQ:SMLR): +15.6%; YTD Price Total Return: 39.22%
Exodus Movement (EXOD): +23.25%; YTD Price Total Return: 755.45%
TSLT (TSLT): +14.4%; YTD Price Total Return: 78.1%
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