What’s Happening With QBTS Stock?

The stock price of D-Wave Quantum (NYSE: QBTS), a quantum computing company, is up a whopping 500% in a month. D-Wave specializes in creating quantum computers that leverage quantum annealing technology to address complex optimization challenges. Unlike conventional computers that operate using binary bits that can only be either one or zero at any given moment, quantum computers employ qubits that can simultaneously exist in multiple states. This enables quantum computers to perform complex calculations with fundamentally different computational capabilities. This enables quantum computers to process sizable amounts of data and explore countless potential outcomes at once.

The application of quantum computing could range from financial modeling and drug discovery to materials science, among others. However, there is a fundamental challenge in quantum computing space, as an increasing number of errors arise as the system grows in complexity with a higher number of qubits. As with any new futuristic technology, things may be volatile at times. That said, if you want upside with a smoother ride than an individual stock, consider the High-Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception.

Notably, there have been some advancements lately with Google’s Willow chip and Amazon’s Quantum Embark in the quantum space. This has fueled the rally in the quantum stocks at large, including QBTS stock. Furthermore, a $2.7 billion government funding for quantum computing has boded well for these stocks.

D-Wave generates revenue primarily through its Quantum Computing as a Service (QCaaS) offerings. These services provide access to advanced quantum computing technologies, including annealing quantum computers with over 5,000 qubits and quantum-classical hybrid solvers capable of tackling complex problems involving up to one million variables. D-Wave is the first company that offers quantum computers called Advantage. The company’s other offerings include, Leap – a quantum cloud service and Ocean – open-source programming tools that help in building quantum applications.

While quantum computing shows significant promise, it remains in a developmental stage and is not yet ready for widespread practical implementation across industries. D-Wave’s current revenue base of $9.4 million in the last twelve months is trivial. Like most of the other quantum computing stocks, QBTS is a high-risk high-growth story, with various factors at play, including technological improvements and costs. The company could potentially sell several quantum computers in the coming years, which may continue to drive its stock higher. Although the losses remain a key factor. The company reported an operating loss of $74 million in the last twelve months. As an investor, the bet will be on the future potential of quantum computing and D-Wave’s place in it. Also, look at What’s Behind The 500% Rise In RGTI Stock?

Looking at its past performance, QBTS stock has been quite volatile and fared worse when compared to the broader markets. Returns for the stock were -86% in 2022, and -39% in 2023. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile, and it has outperformed the S&P 500 each year over the same period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

[1] Returns as of 12/18/2024
[2] Cumulative total returns since the end of 2016

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