Is D-Wave Quantum Stock a Buy After a 50% Gain This Week?
Key Points
A recent acquisition brought gate-model systems into D-Wave Quantum's fold.
A grant from the U.S. government will help it commercialize that part of the business.
The results will be the ability to offer a complete system to quantum customers.
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Investors are jumping aboard D-Wave Quantum (NYSE: QBTS) stock this week. D-Wave shares drifted lower after it reported first-quarter earnings on May 12, even though the company announced record quarterly bookings and outlined a roadmap to scale its quantum technology.
Now investors are pouring back into the stock, though, with D-Wave shares soaring about 54% this week as of Friday afternoon, according to data provided by S&P Global Market Intelligence.
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What the federal grant means
This week's surge followed the National Institute of Standards and Technology (NIST), an agency under the U.S. Department of Commerce, announcing it would award $2 billion in grants to nine companies operating in the quantum computing space. D-Wave was one of those nine. The NIST will also take a minority stake in each company.
IBM was awarded half of that grant money, but D-Wave will receive $100 million, along with several other mid-cap quantum names. The funding alone, stemming from the U.S. CHIPS and Science Act, isn't what really caused D-Wave stock to rocket higher this week, though.
D-Wave already has sufficient cash on hand. As of March 31, the company had nearly doubled its cash and marketable securities versus the prior-year period to $588 million. The company is also generating revenue with its leading annealing quantum systems.
In January, D-Wave acquired Quantum Circuits (QCI) to help it scale up gate-model quantum computers. The combination will provide customers with a complete quantum computing ecosystem, and the new U.S. government connection will go a long way toward marketing that capability. The $100 million is a great way to help expand R&D to complete its commercial offerings. The relationship with the government could be what really markets the company's capabilities, though.
That might be a good reason for investors to allocate at least a small amount to D-Wave Quantum now.
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Howard Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends International Business Machines. The Motley Fool has a disclosure policy.
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