1 Quantum Computing Stock That Has Crushed the S&P 500 Index This Year -- Should Investors Jump Aboard or Run for the Hills?

The benchmark S&P 500 index hasn't had the best 2025 so far. It's essentially flat year to date as of May 29, but along the way, it has experienced extreme turbulence, falling by close to 20% from highs made in late February, only to recoup most of those losses. Still, even in times of underperformance and uncertainty, there are always pockets of the market that do well.

Savvy investors will look in the nooks and crannies of the market to find hidden opportunities and generate alpha. One sector that has been captivating some of them is quantum computing -- an umbrella term for an innovative type of tech that capitalizes on the unusual ways that matter behaves at a subatomic scale to create machines capable of solving enormously complex problems that even powerful traditional computers can't. One quantum computing stock, in particular, has crushed the S&P 500 this year. Should investors buy it or run for the hills?

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From academic to enterprise-driven

Classical computers store and process data in bits -- the most basic binary units of information. They can have a value of either zero or one. Quantum computers process and store data in an entirely different way, using qubits, which can also have values that are probability amplitudes -- complex weighted combinations of those zero and one states. Setting aside the fiendishly complicated hows and whys, using qubits to run calculations allows quantum computers to rapidly get answers to certain unusual types of problems that would take years or even centuries for a classical supercomputer.

But the optimistic view of quantum computing is similar to the outlook on artificial intelligence (AI) -- such machines could have a vast array of use cases if developers can get the technology to the level that experts think is possible.

Image source: Getty Images.

While researchers have been working on various paths toward this technology for many years, it's still a pretty novel concept for the general public and most retail investors. Plus, the expert view is that we're still far away from reaching quantum computing's full potential or commercializing the tech broadly.

But on the road toward those goals, D-Wave (NYSE: QBTS) appears to be leading the charge on this innovation, and its stock is up over 95% this year. Recently, the company announced the general availability of its sixth-generation Advantage2 quantum computing system, which, it explains, can solve "computationally complex problems beyond the reach of classical computers." The company also says the system is built to address real-world problems in areas including optimization, materials simulation, and artificial intelligence.

A white paper from the company says that its new system has 40% higher energy scale, twice the coherence time, and four times less noise than its prior one. In quantum computing, "noise" creates disruptions in the states of qubits, impairing the computer's ability to get an accurate solution to the problem it's working on. Less noise leads to more accuracy. Benchmark analyst David Williams noted in a research note that D-Wave's decrease in noise is a big deal because the capabilities of its earlier smaller prototype had already been looked upon favorably.

Analysts at JPMorgan Chase also highlighted D-Wave's success in a recent report the bank published about quantum computing, noting "this prototype claims significant speedups over classical supercomputers."

Buy the stock or keep it on your watch list?

D-Wave's new system certainly seems to be gaining traction. Earlier this year, the company sold its first quantum computer to a Germany-based research company for about $15 million -- that sale provided the bulk of its revenue in the first quarter, and boosted its top line by more than fivefold from the prior-year period. The company also reported a much smaller net loss in the quarter.

But investors should keep in mind that D-Wave already has a market cap of roughly $5.5 billion, so investors have already baked a lot of anticipated future progress into the stock. Quantum computing has exciting potential to help innovators solve complex problems in ways that could transform our everyday lives. And D-Wave seems to be leading the pack in the race to provide them with these powerful new tools. But we still don't know how long it will be before D-Wave or any of its rivals reach the point where quantum computing becomes a more mainstream technology that is cost-effective, reliable, and operable at scale.

It would be difficult for a retail investor with no background in quantum mechanics to truly evaluate the technology and the progress the various players in the space are making. For this reason, while I think that investors could feel comfortable buying some D-Wave stock now, I'd suggest that it should be a smaller position in the speculative section of their portfolios.

Should you invest $1,000 in D-Wave Quantum right now?

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JPMorgan Chase is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.