Why D-Wave Quantum Stock Keeps Going Up
Key Points
The U.S. Department of Commerce will award D-Wave Quantum $100 million to improve accuracy in quantum computers.
D-Wave will burn through that cash in under a year.
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Yesterday, as you've probably heard, The Wall Street Journal reported on a Trump Administration plan to award $2 billion in grants to nine quantum computing companies -- D-Wave Quantum (NYSE: QBTS) among them -- and to take U.S. government equity stakes in the companies in return. D-Wave stock started moving one day before the announcement, then rocketed higher yesterday -- and higher again today.
Up 17.2% through 11:20 a.m. Friday, D-Wave shares have gained an astounding 66% in just three days of trading, and investors are wondering: Is any price too high to pay for this quantum computing stock?
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Now it's official
Shortly after WSJ broke the story, the U.S. Department of Commerce confirmed that not only does it plan to award grants, but it has in fact already signed letters of intent to do so.
Operating under the CHIPS and Science Act, Commerce will "support and accelerate critical research and manufacturing of technologies for the quantum ecosystem to ensure continued United States leadership and national security." Two quantum foundries, Globalfoundries (Nasdaq: GFS) and International Business Machines (NYSE: IBM), will receive $375 million and $1 billion, respectively.
D-Wave and five others will receive $100 million apiece, and a ninth company will receive $38 million. Each of the seven non-foundry recipients will focus on specific technologies needed to build quantum computers. D-Wave in particular will focus on optimizing qubit counts and error rates to improve accuracy.
What does this mean for D-Wave stock?
Will even $100 million make D-Wave stock a winner, though? The company has burned more than $100 million over the last 12 months after all. Even if D-Wave gets everything it's allotted, this grant adds only one year to its lifespan.
With no profits forecast for many years, D-Wave remains a risky bet.
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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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