The Jensen Huang 'Whack'
Dear subscriber,
Jensen Huang can not only create billion-dollar industries... He can destroy them with a single sentence.
Huang, the CEO of Nvidia (NVDA), has become a business-world rock star. He commands huge crowds, wears trademark leather jackets, and sports a net worth of roughly $119 billion.
He deserves the credit. Nvidia is an incredible technology company with great products. And though we've questioned the stock's valuation at times, that's just a testament to the market's belief in Huang.
As we've covered in the past, Nvidia has become the most-watched stock in the market. Investors now hang on every word in every speech and interview its CEO gives.
And this week, Huang obliterated the nascent bull market in quantum computing with just one comment...
See, Huang was rightly honored with a keynote slot at the 2025 Consumer Electronics Show, which kicked off this Tuesday. It is the biggest technology trade show of the year.
He spoke for more than an hour, sharing great information about artificial intelligence and computing.
But it was the following day, in a smaller Q&A session with financial analysts, when Huang laid waste to the quantum-computing market.
Asked about the technology, Huang warned that it was a long way off... Specifically, he said that "very useful quantum computers" were probably 20 years away.
There's little doubt in my mind that Huang's right.
We won't get too deep into the technology behind quantum computing in these pages. Let's just say it uses special chips that rely on advanced physics to massively increase computing power.
A quantum computer is not like your standard PC. Its chips need to be supercooled to near absolute zero, and they can only process specific types of computations. The tasks they work on now are more so experiments to prove the computer works... It's not necessarily solving novel, practical problems. The technology is really more proof of concept than it is useful.
Plus, given the cost and the complexity, you'll never actually own a desktop quantum computer. Rather, they'll be used in research labs for high-end computations... and, again, that's years down the road.
Even still, quantum stocks have been hot lately...
On December 9, Google parent Alphabet (GOOGL) announced a major quantum breakthrough. It has developed a quantum computer – based on a chip called Willow – that, in less than five minutes, can solve a mathematical calculation that one of the most powerful supercomputers couldn't complete in 10 septillion years.
Moreover, it has surpassed the "error correction threshold," something scientists have been working toward for decades. (Error correction is a way for a computer to reduce the number of mistakes it makes.)
On the back of that announcement, Alphabet shares surged... and so did the stocks of smaller, speculative quantum companies like Rigetti Computing (RGTI), IonQ (IONQ), D-Wave Quantum (QBTS), and Quantum Computing (QUBT).
The move in the smaller stocks always looked curious to me...
Alphabet's breakthrough may have sped up the timeline for creating a useful quantum computer, but the industry is still a long way off.
And rather than suggest that Alphabet's quantum competitors would have success... I'd think that Alphabet's announcement would have sent their stocks down. They are, after all, getting beaten by a larger, better-funded competitor.
(Our own Dave Lashmet, way back in 2018, dug into Alphabet's quantum efforts. For subscribers of his Stansberry Venture Technology advisory, he specifically predicted that it would be the "first company to reach quantum supremacy." He was spot-on.)
For now, these non-Alphabet quantum-computing companies have little in the way of useful, sellable technology. As a group, those four stocks have about $59 million in combined revenues over the past 12 months... yet, they have a combined market cap of $21 billion (well, before they crashed).
When Huang threw cold water on the near-term prospects, the stocks tanked...
Alphabet's stock has been insulated from the crash. Quantum computing is still just a tiny part of its business. And its gobs of advertising revenue can easily fund a 20-year project.
For the others, the path isn't as clear...
Investing in exciting future technologies sounds like a great way to get rich. And it can be.
But as the timeline for useful technology stretches further into the future, the risks rise.
Mostly, that's because technology gets less predictable. However, there are also financial reasons...
For one, long-term projects like quantum computing don't lend themselves well to public companies. They burn money – potentially billions of dollars – for 10 to 20 years on things like specialized infrastructure and maintenance. That's a hard pill to swallow for public market investors. And the money may run out well before the technology works and becomes profitable.
There's also the issue of "duration" and how future profits get discounted to the present. If investors expected cash flows from these quantum companies 10 years down the road... and that timeline just got pushed to 20 years... well, that's a huge hit to the current value of shares.
To be fair, these stocks are all still up over the past year.
Aside from the sobering financial calculations, it's also true that these stocks became a short-term hype trade.
But the hype doesn't stand a chance against the skepticism of the best technologist of the decade.
You've probably heard that a long time horizon is extremely valuable for investors. That's true. Patience builds wealth.
But the value of that long horizon comes from being able to ride out market cycles... not waiting on businesses that don't yet exist.
Patience works best with companies that are producing real, predictable profits. But being patient doesn't mean you should pile into speculations on businesses that will potentially produce real, predictable profits in the future.
As an investor, yes, you should absolutely look to the future. But on timelines as long as quantum computing's, you should be aware that the risks go way up.
What Our Experts Are Reading and Sharing...
A few issues ago, we questioned the value of market outlooks for the year ahead. Cliff Asness of quant firm AQR Capital Management took a fresh approach. He wrote a retrospective of 10-year market returns... as if he were looking back on this year from 2035. There's some humor in his writing, but it also contains valuable insights on how you should view the long-term returns offered by stocks, bonds, and other assets at these valuations.
Legislation signed by President Joe Biden effectively bans social-media app TikTok on January 19. Today, the Supreme Court will hear an appeal from the company and a group of users, claiming TikTok should be permitted on free speech grounds. It's a unique and precedent-setting case. If you like deep legal analysis, you can read this article at Lawfare, which further explains the context behind the ban.
The country with the cheapest stock market in the world is... Colombia! Meb Faber of Cambria Investment Management updates global valuations in his newsletter, The Idea Farm. It takes patience to invest outside the U.S. these days... But global stocks just keep getting (relatively) cheaper.
New Research in The Stansberry Investor Suite...
At Stansberry Research, we've long thought that one of the best things to hold in your investment portfolio is global elite businesses.
Indeed, we've been writing about them in Stansberry's Investment Advisory for nearly a decade now.
These companies are the best of the best. They are the most powerful in the world... and they just can't be replaced.
But something odd is going on with the biggest and best companies. Their stocks are rising at rates that shouldn't be possible – at least, not when it comes to conventional investing wisdom.
In today's Stansberry Investor Suite research, Bryan Beach gives an update on our Global Elite Monitor and explains the biggest factor driving markets today... one which many market professionals, experts, and even legends just don't seem to understand.
It's called the "relentless bid."
If you want to know why stocks like Apple (AAPL), Amazon (AMZN), Meta Platforms (META), and others keep going up, you have to read this.
And here's a hint: It's not just investors' love for new technology. It's bigger than that – and more enduring.
Stansberry Investor Suite subscribers can read the entire report here.
If you don't already subscribe to The Stansberry Investor Suite – and want to learn more about our special package of research – click here.
Until next week,
Matt Weinschenk
Director of Research
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