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TACO Trade Highlights Volatile Year for Quantum Computing Stocks

As investors face a challenging market, the 'TACO' trade emerges, reflecting volatility linked to tariff discussions. With quantum computing stocks like IonQ and Rigetti facing steep declines despite past surges, scrutiny on valuations amplifies concerns about future performance.

Date: 
AI Rating:   4

Market Overview
As of June 5, both the S&P 500 and Nasdaq Composite indices have registered breakeven returns, indicating that investors are struggling to find profitability. This backdrop highlights the significance of volatility for astute market players looking for opportunities. The emerging "TACO" trade, which capitalizes on market fluctuations triggered by tariff-related rhetoric, suggests that savvy investors may benefit from short-term buys during periods of decline.

Performance of Quantum Computing Stocks
Notably, quantum computing stocks such as IonQ (NYSE: IONQ) and Rigetti Computing (NASDAQ: RGTI) have presented a paradox. Despite massive gains in 2024—IonQ rising 237% and Rigetti soaring 1,450%—both stocks have faced significant downturns in 2025 with declines of 12% and 28%, respectively. This underscores the high volatility associated with stocks in emerging sectors like quantum computing.

Valuation Concerns
The analysis highlights critical valuation metrics that should be of concern to investors. IonQ and Rigetti collectively generated approximately $50 million in revenue over the last 12 months, while incurring a staggering net loss of $460 million. Such metrics indicate that the stocks are trading at valuations that are not grounded in their current financial performance, making them look overvalued.

This situation raises important questions for investors: is it wise to engage with these stocks as part of the TACO trade? Current financial results suggest a trend towards valuation compression, indicating potential continued declines. This should lead investors to exercise caution when considering these stocks for short-term investments.

Investment Outlook
Conclusively, while the TACO trade presents potential buying opportunities during market volatility, IonQ and Rigetti do not appear to be suitable candidates due to their significant losses and inflated valuations. Investors should stay informed about macro trends while also being mindful of the underlying fundamentals before making any investment decisions in this space.

Stocks:  IONQ RGTI