Thematic AI Funds Are Booming. Is Quantum Computing Next?

They might sound like technology out of “Back to the Future,” but quantum computers are no flux capacitors.

The US Department of Commerce announced $2 billion in grants to nine quantum computing companies earlier this month, making the federal government a stakeholder in the sector’s commercial success. The move is similar to 2022’s CHIPS Act, which provided funding for the manufacture of semiconductors, a major current growth area in the world of AI-focused and new leveraged ETFs. But quantum computers may hold even more potential, since they could dramatically push forward the fields of AI, finance, healthcare and cybersecurity. It’s an investing theme that could help provide growth opportunities in client portfolios.

“We talk a lot about intelligence, whether AI is adding value and productivity,” said Chris Gannatti, global head of research at WisdomTree, which runs a quantum computing ETF. “Quantum computing is a natural extension [of] that.”

Quantum Leap

For the non-computer scientists among us, a quantum computer is, very basically, a machine that uses quantum physics to solve complex problems that current supercomputers either can’t solve or would take several million years to solve. Beyond the possibilities of quantum computing and the latest federal funding, however, there are also myriad IPOs that might enable more investment. Last week, the quantum computing firm Quantinuum filed for an IPO targeting a valuation of up to $12.7 billion. “People are hungry for new tech-oriented IPOs, and what’s great is instead of just having exposure to one or two public companies, now you’re able to have a more broadly diversified array,” Gannatti said. Still, there aren’t many funds targeting quantum computing specifically. “What you see a lot of today is mixing quantum computing with something else,” he added.

The two main funds available that focus entirely on quantum computing include:

• The WisdomTree Quantum Computing Fund (WQTM), which is up 50% this year.
• The Defiance Quantum ETF (QTUM) is up 43% over the same period.

Quantify It: Still, many other funds, such as the iShares US Technology ETF (IYW) and the State Street SPDR S&P Semiconductor ETF (XSD), provide major exposure to companies like Nvidia and Intel, which are heavily involved in the quantum computing industry. The sector tends to see inflows when there are specific advances or quantum-related announcements, Gannatti said. “It is wrapped up in this broader technology rally where memory and semiconductors and all sorts of things are also going up, in some cases even more than quantum,” he added. “We are seeing a broadly favorable tech hardware environment.”