Quantinuum Stock Has Tremendous Potential, but It Isn't Cheap

Quantinuum (QNT), the quantum company in which Honeywell (HON) has a 48% stake, has tremendous potential. That's because QNT's technology is quite advanced and has already been validated to a large extent, according to multiple investment banks that recently published bullish notes about QNT stock.

Further, quantum technology itself is likely to be very useful and may be revolutionary, while the U.S. government is backing quantum in general and Quantinuum in particular, and QNT stock has a great deal of positive momentum at this point.

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On the negative side, after QNT stock rose sharply since its debut on June 4 following the company's IPO, the stock is far from cheap, Quantinuum's most promising technology is not due out until 2029, and, as I've pointed out in past columns, the stocks of firms that focus on emerging technologies sometimes plunge sharply.

Still, long-term, risk-tolerant investors looking for an emerging-tech play should consider buying a small amount of QNT stock.

In a recent note to investors, Bank of America wrote that Quantinuum's "newest platform, Helios, delivers industry-leading commercial performance," while multiple firms, including heavyweights Amgen (AMGN) and BMW (BMWKY), are already utilizing the system. J.P. Morgan added that Quantinuum's "Commercial momentum is building," while it has a "diversified...pipeline" of about $5 billion.

Since a meaningful number of companies, including sector powerhouses, have utilized and/or ordered Quantinuum's offerings, while it has a considerable pipeline, its products and technology have been validated to a large extent. And it appears that Helios is one of the world's top quantum platforms.

In May, McKinsey, the highly respected consulting firm, wrote that quantum could perform many valuable functions for companies and "solve problems that overwhelm classical computers, such as advanced simulation and probabilistic modeling." Among the functions that quantum may carry out are "drug discovery, material simulation, supply chain optimization, and financial modeling," the consulting firm reported.

Meanwhile, Washington is getting behind the technology, as President Donald Trump recently signed an executive order that is supposed to promote "innovation" by quantum companies. Even more impressively, the U.S. Department of Commerce has agreed to provide $100 million to Quantinuum, indicating that Washington is impressed with the firm and will likely be prepared to assist it in other ways going forward. Also importantly, the federal government's backing should help quantum technology proliferate over the longer term.

QNT stock's market capitalization of $19 billion is certainly not low, since analysts on average only expect QNT to generate $45 million of revenue in 2027. That works out to a huge forward price-sales ratio of 422x. What's more, as I've noted previously, "the Street has a history of excitedly and rapidly buying the stocks of emerging technologies, only to later quickly unload those same equities as their novelty wore off."

Finally, Apollo, QNT's product that Bank of America expects to trigger a positive turning point in terms of revenue growth for the firm, is not supposed to be released until 2029.

Given the extensive validation of Quantinuum's technology and its apparent high potency, its shares are likely to soar over the long term. Still, QNT stock does pose a great deal of risk in the medium term.

On the date of publication, Larry Ramer did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com

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