Jim Cramer Warns On 'Quantum Stories' As Stocks Plunge: 'We Need You Out Before The Froth Goes Away'

Tech stocks faced steep declines Wednesday as prominent market commentator Jim Cramer warned investors about overvaluation in quantum computing and artificial intelligence sectors, following earlier skepticism from NVIDIA Corp. (NASDAQ:NVDA) CEO Jensen Huang about quantum technology’s timeline.

What Happened: SoundHound AI Inc. (NASDAQ:SOUN) shares plunged 16.44% to close at $15.02, while Quantum Corp. saw a 30.33% drop to $31.43.

The selloff extended to other quantum computing players, with IonQ Inc. (NYSE:IONQ) falling 39.2% and Rigetti Computing Inc. (NASDAQ:RGTI) declining 45.41%.

“Not too late to sell the myriad quantum stories out there.. We need you out before the froth goes away and the Soundhounds and Quantums head back down,” Cramer posted on X, cautioning investors about market froth in these sectors.

Cramer’s warning came after Huang’s sobering assessment that practical quantum computers could be decades away, with optimistic estimates ranging from 15 to 30 years.

Not too late to sell the myriad quantum stories out there.. We need you out before the froth goes away and the Soundhounds and Quantums head back down

— Jim Cramer (@jimcramer) January 9, 2025

The tech selloff coincided with broader market pressures, including rising treasury yields, with the 30-year yield reaching 4.90%. Higher borrowing costs particularly affect growth-oriented companies in the AI and quantum computing sectors.

See Also: ‘No Rate Cuts In Q1 2025,’ Strategist Says After Fed’s December Minutes

Why It Matters: Despite the market reaction, companies continue to showcase technological advances. At CES 2025, SoundHound AI demonstrated its new in-vehicle voice commerce platform, integrating with restaurant brands for hands-free ordering through car infotainment systems.

The dramatic declines follow substantial gains over the past year, with some quantum computing stocks posting returns exceeding 800%. Technical indicators suggest potential support levels, with IonQ’s 200-day simple moving average at $14.33 and Rigetti showing neutral Relative Strength Index levels at 46.58, though current market sentiment remains bearish.

Price Action: In Wednesday’s after-hours trading, SoundHound AI Inc. saw a modest decline of 0.53%, while Quantum Corp. climbed 4.84%, according to data from Benzinga Pro.

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Image via Quantum

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.