Tech stocks experienced significant downturns on Wednesday, as investor sentiment soured regarding the valuations of companies within the quantum computing and artificial intelligence sectors. This shift in market dynamics followed cautionary remarks from renowned market commentator Jim Cramer and CEO of NVIDIA Corp., Jensen Huang.

Cramer specifically pointed out the overstated valuations surrounding various quantum computing stocks, urging investors to reconsider their positions. He emphasised his perspective through a post on social media platform X, where he stated, “Not too late to sell the myriad quantum stories out there.. We need you out before the froth goes away and the Soundhounds and Quantums head back down.” This advisory followed Huang's assessment indicating that practical quantum computers may not be realised until several decades into the future, suggesting optimistic predictions still range between 15 and 30 years before widespread effectiveness could be achieved.

Several companies faced significant losses amidst this wave of scepticism. SoundHound AI Inc. suffered a decline of 16.44%, closing at $15.02, while Quantum Corp. fell 30.33%, ending the day at $31.43. Other players in the quantum space were not spared; IonQ Inc. experienced a 39.2% drop, and Rigetti Computing Inc. recorded an even steeper decline of 45.41%.

The broader tech selloff is attributed to heightened market pressures, with rising treasury yields contributing to increased borrowing costs—factors that particularly affect growth-oriented firms within the AI and quantum computing sectors. Notably, the 30-year Treasury yield reached 4.90% during this period.

Despite the challenges, innovation continues within the tech landscape. At CES 2025, SoundHound AI showcased advancements in its voice commerce platform designed for in-vehicle use, which enables hands-free ordering from partnered restaurant brands directly via car infotainment systems.

This market correction follows a year of remarkable gains for some quantum computing stocks, which had previously posted astounding returns exceeding 800%. Presently, technical indicators reveal potential support levels, such as IonQ’s 200-day simple moving average at $14.33, while Rigetti exhibits neutral conditions with its Relative Strength Index at 46.58. However, the prevailing sentiment across the market remains bearish, casting uncertainty on future valuations.

In after-hours trading on the same Wednesday, SoundHound AI Inc. saw a slight decline of 0.53%, whereas Quantum Corp. recorded a modest gain of 4.84%. These fluctuations underscore the volatility that characterises the AI and quantum computing sectors, reflecting investor caution as market trends evolve.

Source: Noah Wire Services