D-Wave Quantum Inc. (QBTS) experienced a sharp decline of 5.10% during intraday trading on Thursday, as market analysts cautioned about the growing boldness of retail investors in smaller AI and quantum computing stocks. This movement comes amid broader concerns about the sustainability of the recent stock market rally, particularly in the tech sector.

According to a report from Vanda Research, retail investors have been increasingly venturing into riskier, high-beta stocks after taking profits from major technology companies. D-Wave Quantum was specifically mentioned as one of the most purchased Russell 2000 names in the past month, alongside other AI and quantum computing related stocks. While D-Wave has seen significant gains over the past year, up over 1,000%, and has risen 112% year-to-date, today's plummet suggests a potential shift in investor sentiment.

Analysts from Panmure Liberium, including Joachim Klement and Susana Cruz, have raised red flags about the current market conditions. They warn that the disagreement between retail investors' bullishness and hedge funds' increasing bets against U.S. markets historically signals a poor time to invest in U.S. stocks. This cautionary stance, coupled with concerns about overvaluation and complacency in the face of lingering macro risks, may be contributing to the sell-off in speculative AI stocks like D-Wave Quantum.