Why Did Quantum Computing Stock Pop Today?
Key Points
The Trump Administration plans to award $2 billion in grants and take equity stakes in nine quantum computing companies.
Despite having the best name in the industry, Quantum Computing stock is not one of them.
- 10 stocks we like better than Quantum Computing ›
Valued at only $2.2 billion in market capitalization, Quantum Computing (NASDAQ: QUBT) stock may have the best name in the quantum computing industry -- but it's still one of the smaller stocks in this industry. Despite what you may be seeing happen with the stock price today, however, I fear Quantum Computing may be destined to stay small.
Shares of Quantum Computing leapt 16% through 11:05 a.m. ET Thursday morning, after The Wall Street Journal reported the Trump Administration plans to award $2 billion in grants to nine quantum computing companies and take equity stakes to secure its investment in each.
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Money for thee, but not for me
That sounds like good news, but here's the thing:
Quantum Computing is not one of these nine companies. Instead of giving money to Quantum Computing, the Trump Administration will award $100 million each to its rivals D-Wave Quantum (NYSE: QBTS), Infleqtion (NYSE: INFQ), and Rigetti Computing (NASDAQ: RGTI), $375 million to Globalfoundries (NASDAQ: GFS), and a cool $1 billion to International Business Machines (NYSE: IBM)!
A handful of privately owned companies will split the remainder of the $2 billion.
And Quantum Computing itself will get none.
What does this mean for Quantum Computing stock?
So how is this good news for Quantum Computing stock, if it's getting no money, and everyone else is getting a lot of money -- plus backing from the U.S. government that will give it an interest in seeing Quantum Computing's rivals succeed (and perhaps that Quantum Computing fails)?
I honestly don't see any logic in investors buying Quantum Computing stock on this news. With analysts still expecting the stock to lose money for years, it may be time to sell.
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends GlobalFoundries and International Business Machines. The Motley Fool has a disclosure policy.
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