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Cramer Skips Quantum Stock on Rate Fears
25 Jul
Summary
- Jim Cramer avoids IonQ due to rising interest rates.
- Quantum stocks surged after US investment plans.
- IonQ stock has fallen significantly year-to-date.
Quantum computing is a key focus on Wall Street, with the Trump administration announcing over $2 billion in investment. This news initially boosted stocks in the sector, attracting significant investor interest.
However, financial commentator Jim Cramer has expressed caution, specifically regarding IonQ (IONQ). He stated on "Mad Money" that rising interest rates make such stocks challenging to hold. Cramer's concern stems from the macro environment affecting high-growth companies with long paths to profitability.
Companies like IonQ, which incur substantial expenses for future gains, are often valued using long-duration discount models. When interest rates increase, these future cash flows are discounted more heavily, potentially reducing valuations. IonQ's projected 2026 Adjusted EBITDA loss further highlights its sensitivity to this economic factor.
Despite Cramer's focus on macroeconomics, the article notes that IonQ exhibits genuine fundamental momentum. Its stock has seen a significant drop, trading down year-to-date against the S&P 500's gains and losing over half its value from a recent peak.
