This growth stock is up 2,564% over 6 months! Is this FOMO?

This growth stock has experienced an incredible appreciation in its share price. It’s not a meme stock, but investors might be experiencing FOMO.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Young woman working at modern office. Technical price graph and indicator, red and green candlestick chart and stock trading computer screen background.

Image source: Getty Images

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Growth stock Quantum Computing Inc. (NASDAQ:QUBT) is the talk of the town, with its stock price skyrocketing an astonishing 2,654% over the past six months. This meteoric rise has left investors wondering if they’re witnessing the birth of the next big tech giant or if it’s simply a case of FOMO (fear of missing out) driving unsustainable gains.

The quantum buzz

The recent surge in Quantum Computing’s stock price can be attributed to a series of positive developments, arguably some taken out of proportion, culminating in a contract with NASA. In you hadn’t noticed, quantum stocks have been receiving a lot of attention in recent months, partially due to the recent unveiling of Google’s Willow chip, but also things like developments in ion-ion transfer.

On 17 December, 2024, Quantum Computing announced that it had secured a contract with NASA’s Goddard Space Flight Center, sending its shares soaring and compounding gains from earlier in the autumn.

Passive income stocks: our picks

Do you like the idea of dividend income?

The prospect of investing in a company just once, then sitting back and watching as it potentially pays a dividend out over and over?

If you’re excited by the thought of regular passive income payments, as well as the potential for significant growth on your initial investment…

Then we think you’ll want to see this report inside Motley Fool Share Advisor — ‘5 Essential Stocks For Passive Income Seekers’.

What’s more, today we’re giving away one of these stock picks, absolutely free!

Get your free passive income stock pick

The NASA contract centres around the firm’s Dirac-3 technology, an entropy quantum optimisation machine that could revolutionise advanced imaging and data processing. Specifically, the technology will be applied to tackle the complex ‘phase unwrapping’ problem in interferometric data generated by radar.

In short, this could have various applications for NASA such as Earth observation, climate monitoring, and space exploration. But for Quantum Computing, this collaboration will hopefully demonstrate the superiority of the company’s quantum optimisation machine over traditional algorithms used on classical computers.

Expert caution

Despite the excitement surrounding quantum technologies, investors may want to exercise caution.

Danil Sereda, Investing Group Leader, for Beyond the Wall Investing, warns that the quantum computing space is highly competitive, and only one or two companies are likely to survive in the long run. He cautions against investing broadly in the entire niche without understanding each company’s specific prospects.

Sereda also points out the disconnect between skyrocketing market caps and actual financial performance — it has a price-to-sales ratio of 3,980 times. For instance, Quantum Computing’s market capitalisation has soared to nearly $2bn, despite reporting little revenue and continued losses. The loss-making situation doesn’t look like improving anytime soon.

The bottom line

While Quantum Computing’s recent NASA contract and the resulting stock surge are undoubtedly exciting, investors should approach with caution. The quantum computing sector is still in its infancy, and while the potential is enormous, so are the risks.

With some of the artificial intelligence (AI) excitement running low, retail investors may have turned to quantum technologies as a new frontier for potential growth and innovation. And while I’m personally very excited by developments in quantum computing, I’m also concerned that these astronomical gains may be something of an overreaction, exaggerated by FOMO.

I’m also very aware that if I had invested in the stocks in the ‘quantum watchlist’ I made in September, I’d be a very rich man right now. However, for now at least, I’ll continue to watch from the sidelines. It’s hard to justify the valuations.

Our analysis has uncovered an incredible value play!

This seems ridiculous, but we almost never see shares looking this cheap. Yet this Share Advisor pick has a price/book ratio of 0.31. In plain English, this means that investors effectively get in on a business that holds £1 of assets for every 31p they invest!

Of course, this is the stock market where money is always at risk — these valuations can change and there are no guarantees. But some risks are a LOT more interesting than others, and at The Motley Fool we believe this company is amongst them.

What’s more, it currently boasts a stellar dividend yield of around 10%, and right now it’s possible for investors to jump aboard at near-historic lows. Want to get the name for yourself?

See the full investment case

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. James Fox has no position in any of the shares mentioned. The Motley Fool UK has recommended Alphabet. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

At a 52-week low but forecast to rise 73%! Is this growth share the FTSE’s top recovery play? 

This FTSE 100 growth share has taken an absolute beating over the past two years but Harvey Jones says the…

Read more »

Investing Articles

This FTSE 250 share offers a juicy 9.8% yield. Will it last?

This well-known FTSE 250 share has a percentage dividend yield approaching double digits. Should Christopher Ruane add the income share…

Read more »

Investing Articles

Is a £333,000 portfolio enough to retire and live off passive income?

A third of a million pounds can generate a serious amount of passive income, but relying on this sum alone…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing For Beginners

Why FTSE 100 investors should pay attention to ‘Liberation Day’

Jon Smith explains why the upcoming tariff announcement from across the pond could have an impact on the FTSE 100,…

Read more »

Concept of two young professional men looking at a screen in a technological data centre
Investing Articles

Here’s why Nvidia stock fell 13% in March

The Nvidia stock price rise was looking unstoppable. Should investors now be wondering if the same might be true of…

Read more »

US Stock

It’s ISA deadline week! Here’s my 3-step game plan

Jon Smith tries to calm the hype around the last minute ISA rush to buy stocks and explains why he's…

Read more »

Snowing on Jubilee Gardens in London at dusk
Investing Articles

£10,000 invested in BAE Systems shares at Christmas is now worth…

BAE Systems shares have been surging in the FTSE 100 in 2025, driven higher by the wavering US commitment to…

Read more »

Investing Articles

Up 19% in 2 weeks, can the Tesla share price rebound further?

Tesla's first-quarter delivery numbers came out today. Will they help persuade our writer to invest his money at the current…

Read more »