Why D-Wave Quantum Stock Popped Today

D-Wave Quantum (NASDAQ: QBTS) stock jumped 7.2% through 12:15 p.m. ET Friday after BMO Capital analyst Harsh Kumar initiated coverage of the quantum computing stock with an outperform rating.

According to Kumar, this $20 quantum stock could easily hit $35 within a year.

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Why BMO loves D-Wave Quantum

D-Wave Quantum "is a revolutionary quantum computing company and one of the few in the world that currently has true commercial revenues," argues Kumar. It's also the only quantum company using both annealing and gate model approaches to quantum computing.

Annealing is an approach best suited to solving problems with an enormous number of possible solutions. Qubits begin in quantum superposition, become coupled and potentially entangled, and gradually transition toward classic 0/1 states, aiming to arrive at the lowest possible energy (i.e., the most likely correct) solution. Conversely, gate model quantum computing more closely resembles traditional computing, where algorithms control circuits to find the correct solution.

Kumar believes D-Wave's strategy of exploring both quantum approaches gives it a first-mover advantage in each, and makes D-Wave "best positioned in the quantum space to have commercial success."

What's next for D-Wave Quantum stock

Just don't expect that success to happen instantly -- or even within the easily foreseeable future. D-Wave isn't profitable today, and, as far out as most analysts are willing to project (2030), D-Wave's expected to still be losing money and burning cash.

Sales, on the other hand, are expected to more than 10X over the next four years, passing $444 million in 2030. If that's your measure of success -- D-Wave's business getting bigger as it makes more and more unprofitable sales -- then I guess I'd agree that D-Wave's on course for "commercial success."

I just wouldn't want to own it myself.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.