After the Reset: Retail Conviction Meets Wall Street Caution in Quantum and AI Small Caps
Halfway through the third quarter, the quantum and AI small-cap trade is defined by a tension: the stocks have underperformed badly in 2026, yet neither retail investors nor a growing bench of sell-side analysts appear ready to abandon the theme. As of early August, IonQ was down 7% year to date, Rigetti Computing off 21% and D-Wave Quantum down 16%, according to Stocktwits, even as the broader market hovered near record highs.
The drawdown was sharper beneath the surface. In late July, 24/7 Wall St. reported that IonQ had lost 39% in a single month — trading near $32.86 at the time — with Rigetti and D-Wave each down roughly 30% and Quantum Computing Inc. off 24%, a slide it attributed to sector-wide de-risking as investors rotated away from high-multiple, pre-profit technology amid a broader reset in AI-infrastructure and semiconductor valuations.
Valuation remains the crux of the bear case. IonQ was recently the only member of the group with a meaningful trailing price-to-earnings ratio — cited above 100 by 24/7 Wall St. in early August — while its peers remain unprofitable on every conventional measure. That leaves the group priced principally on bookings, backlog and roadmap milestones rather than earnings, a framework that amplifies both rallies and drawdowns.
Wall Street, notably, has been adding coverage rather than retreating. Wedbush initiated all three major pure plays with Outperform ratings, setting a $75 price target on IonQ and $40 targets on both Rigetti and D-Wave, according to Stocktwits. Across the sector more broadly, the consensus target on IonQ stood near $68 even at the depth of the July selloff, per 24/7 Wall St. — implying substantial upside from prevailing prices, if the fundamentals cooperate.
Retail conviction, meanwhile, has barely wavered. A Stocktwits poll published August 5 found 81% of respondents remained optimistic about pre-profit quantum companies, and the platform highlighted traders pointing to 'real products, real revenue, real roadmap' as grounds for staying long. That loyalty has been rewarded in bursts: on August 3 alone, D-Wave spiked 11% on its Nasdaq Verafin fraud-detection collaboration and IonQ rose 9% on the close of its SkyWater acquisition, per 24/7 Wall St.
The earnings season that followed complicated the narrative rather than resolving it. IonQ's 287% revenue growth and raised guidance, reported by Data Center Dynamics, validated the commercialization thesis at the top of the group, while Rigetti's 183% growth came off a base so small that shares slipped on the print and D-Wave's quarterly revenue stayed near $3 million despite bookings up more than 1,100% in the first half.
The AI small-cap side of the trade offered its own split screen. SoundHound AI's record $61.9 million quarter and raised guidance drove a roughly 10% single-day pop, as The Motley Fool reported, suggesting the market still pays up promptly for growth that arrives with improving margins. Names that cannot show that combination have found conditions far less forgiving.
The path from here runs through a dense catalyst calendar. Consumer and producer inflation data due this week will shape the rate backdrop that high-duration growth stocks depend on, with markets treading water ahead of the prints, according to Investrade's August 11 market summary. Within the sector, Data Center Dynamics noted results from Quantinuum and Infleqtion due August 11 and 12, and IonQ has scheduled an investor day for September 8. For a group that trades on belief as much as bookings, the second half will test which of the two currently has the upper hand.
