By Mackenzie Tatananni

Quantum computing stocks are having a tumultuous week, but one fund manager says investors should focus on the long game when it comes to the sector.

Earlier this week, quantum computing stocks broadly slid after Nvidia CEO Jensen Huang said "very useful quantum computers" were decades away.

However, Joe Tigay, portfolio manager of the Rational Equity Armor fund, said Huang's remarks should help investors manage expectations, rather than downgrade the technology's future possibilities.

Huang's comments "offer a realistic perspective rather than diminishing the immense potential of quantum computing," said Tigay.

Quantum computers harness quantum mechanics to solve problems, using subatomic particles like electrons or photons. Quantum bits -- more commonly known as "qubits" -- allow the particles to exist in more than one state at the same time. In theory, this could allow computers to perform calculations that otherwise might take millions of years.

Speaking to analysts during a question-and-answer session on Tuesday, Huang signaled that it would take decades for the technology to arrive.

"If you kind of said 15 years for very useful quantum computers, that would probably be on the early side," the Nvidia CEO said. "If you said 30, it's probably on the late side. If you picked 20, I think a whole bunch of us would believe it."

The remarks sent quantum computing stocks spiraling, with IonQ, Rigetti Computing, D-Wave Quantum, and Quantum Computing seeing double-digit percentage declines on Wednesday. (The same stocks had climbed sharply after Google unveiled its Willow quantum chip in December.)

Through Wednesday's close, the four stocks have declined 37%, 47% 33%, and 43% this week, respectively.

Alan Baratz, CEO of D-Wave Quantum, had a very different assessment of the industry. During a CNBC appearance Wednesday, he said his company's services were being used by clients like Mastercard "not 30 years from now, today."

Tigay noted that Huang differentiated between quantum computers for widespread consumer use and ongoing advancements in research, which "underscores the importance of separating immediate expectations from the transformative possibilities ahead."

His fund primarily invests in the common stock of dividend-paying companies included in the S&P 500, with Alphabet and Microsoft included among its top 10 holdings. Technology stocks composed about 41% of the fund as of Oct. 31, 2024, according to Morningstar.

Tigay said Microsoft, Alphabet, and IBM see quantum computing as a "long-term strategic investment. That long-term focus, however, might shift toward near-term applications in areas such as drug discovery and financial modeling, "where existing quantum computers already demonstrate potential advantages," he added.

It's also worth noting that, for now, quantum computing isn't a key part of Nvidia's business strategy. The company is focused on so-called "classical computing," such as graphics processing units that power artificial intelligence.

However, the chip maker could provide hardware and software infrastructure to accelerate the development of quantum computers further down the line.

Tim Costa, the senior director of computer-aided engineering and quantum computing at Nvidia, said in 2022 that while large cloud vendors offered a variety of quantum computers at the time, they lacked the processing power to make them commercially viable.

Since then, the technology has certainly improved. Google's Willow chip marked a significant milestone, with the company writing that it "demonstrates error correction and performance that paves the way to a useful, large-scale quantum computer."

As Barron's previously reported, smaller companies developing the technology are at an even greater disadvantage and are unlikely to generate significant revenue for years to come.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

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January 09, 2025 15:23 ET (20:23 GMT)

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