After an explosive second quarter, July has been a reality check for quantum computing stocks. Pure-play names such as Rigetti Computing RGTI and Quantum Computing Inc. QUBT or QCi, D-Wave Quantum QBTS and IonQ IONQ have pulled back sharply as investors locked in profits and rotated away from high-beta technology stocks. Yet Zacks' short-term price targets continue to imply triple-digit upside for these companies, highlighting Wall Street's optimism despite the recent pullback. Let's get into the details.
Profit-Taking and Macro Concerns Trigger July Pullback
The sell-off appears to have been driven more by macroeconomic and market-wide factors than by any deterioration in company fundamentals. Throughout July, investors grew increasingly cautious about lofty valuations across AI- and quantum-related stocks amid concerns over the sustainability of surging AI infrastructure spending and renewed profit-taking following the sector's strong second-quarter rally.
The weakness was evident across the broader quantum computing theme. The Defiance Quantum ETF (QTUM), which provides diversified exposure to quantum computing and related enabling technologies, declined nearly 12% between June 1 and July 23, reflecting broad-based selling across the sector.
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Economic Fundamentals Continue to Support Risk Appetite
The broader economic backdrop remained resilient despite moderating momentum. According to the Institute for Supply Management (ISM), the Manufacturing PMI eased to 53.3 in June from 54.0 in May, remaining above the 50 threshold for the sixth consecutive month and signaling continued expansion in U.S. factory activity. New orders and production continued to grow, albeit at a slower pace, while input cost pressures moderated. The data suggest that manufacturing activity remains healthy even as growth normalizes from earlier strength.
Importantly, the quantum computing industry's long-term investment thesis remains intact. Governments and enterprises continue to increase spending on quantum technologies, while commercial adoption is gradually expanding beyond research into optimization, cybersecurity, artificial intelligence and drug discovery. Recent quarterly results from leading pure-play companies also reflected strong customer demand through expanding bookings, growing commercial partnerships, rising remaining performance obligations and healthy liquidity positions.
Long-Term Fundamentals Remain Intact Despite Near-Term Volatility
For investors, however, valuation remains the key consideration. Most quantum pure-plays continue to trade at levels that imply years of future execution, making them highly sensitive to shifts in interest-rate expectations and overall market sentiment. Consequently, periods of macro-driven risk aversion tend to produce outsized corrections even when company-specific fundamentals remain unchanged.
2 Quantum Stocks With Significant Upside Potential
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Rigetti: Shares of Rigetti have declined 42.1% since June. Despite the recent pullback, Rigetti remains one of the more compelling pure-play quantum computing investments. In the last reported first-quarter 2026, the company reported revenue growth of nearly 199% year over year, driven by increased government and commercial activity. The company successfully maintained a strong liquidity position with approximately $569 million in cash, cash equivalents and available-for-sale investments. Rigetti continues to advance its superconducting quantum roadmap, with management reiterating plans to launch its 108-qubit Cepheus-1 system in 2026 and emphasizing improvements in qubit fidelity and scalability. The company's expanding collaborations with government agencies and enterprise customers position it to capitalize as commercial quantum adoption accelerates.
For the to-be-reported second quarter of 2026 ending June, Rigetti is projected to report earnings growth of 40% on revenue growth of 173%. The average price target of $31.00 represents an increase of 108.8% from the last closing price of $14.85. The stock carries a Zacks Rank #3 (Hold).
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QCi: Shares of QUBT have lost 36.6% since June. The company also appears well-positioned despite the recent share-price weakness. QCi reported first-quarter 2026 revenues of $3.7 million, up sharply from $39,000 a year earlier, primarily reflecting contributions from the Luminar Semiconductor and NuCrypt acquisitions, which expanded its photonics and quantum technology capabilities.
The company ended the quarter with $1.4 billion in cash, cash equivalents and investments, providing significant financial flexibility to support product development and commercialization. With an enhanced technology portfolio and a strong balance sheet, QCi is well-positioned to pursue new enterprise opportunities.
For the second quarter of 2026, QUBT is projected to report earnings growth of 16.7% on revenue growth of a significant 7733%. The average price target of $18.33 represents an increase of 133.2% from the last closing price of $7.86. The stock also carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Quantum Computing Inc. (QUBT): Free Stock Analysis Report
Rigetti Computing, Inc. (RGTI): Free Stock Analysis Report
IonQ, Inc. (IONQ): Free Stock Analysis Report
D-Wave Quantum Inc. (QBTS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).