D-Wave Quantum Is Skyrocketing Today -- Is the Stock a Buy Right Now?
Key Points
TD Cowen thinks D-Wave will be one of the biggest winners from the U.S. government's investments in quantum computing.
The U.S. Department of Commerce is on track to invest $100 million in D-Wave.
- 10 stocks we like better than D-Wave Quantum ›
D-Wave Quantum (NYSE: QBTS) stock is roaring higher in Friday's trading. The quantum computing specialist's share price was up 17.2% as of 1:30 p.m. ET. Meanwhile, the S&P 500 was up 0.8%, and the Nasdaq Composite was up 0.6%.
Following yesterday's news that D-Wave Quantum had signed a letter of intent to secure $100 million in funding through the CHIPS and Science Act, TD Cowen has named the company one of the top three biggest winners from the U.S. government's new quantum computing investment initiative. The other two companies named by TD Cowen as top beneficiaries of the project were Rigetti Computing and GlobalFoundries.
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Is D-Wave stock a buy right now?
In exchange for receiving $100 million in funding from the U.S. Department of Commerce over a three-year period, D-Wave will be providing the department with new stock of the equivalent value. D-Wave will be creating new shares to sell to the government, which means that current shareholders will see stock dilution as a result of the deal. On the other hand, the Department of Commerce's pending investment in D-Wave represents a powerful vote of confidence from one of the best partners the company could have.
The government's plan to invest in D-Wave doesn't necessarily mean that the company will emerge as a long-term winner in the quantum space, but it signals that the tech specialist is viewed as one of the most promising players in the industry. With the company valued at roughly $11.15 billion as of this writing, D-Wave is trading at approximately 263 times this year's expected sales. The quantum specialist's valuation profile and speculative outlook mean that it continues to be a very risky investment candidate, but substantial government investment could lend legitimacy to its growth story and help shares keep marching higher.
Should you buy stock in D-Wave Quantum right now?
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Keith Noonan 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.
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