What’s Behind 300% Rise In QUBT Stock?

The stock price of Quantum Computing Inc. (NASDAQ: QUBT), an integrated photonics company, focused on developing and commercializing quantum computing technologies, lost over 40% of its value on Thursday, December 19. Still, the stock is up a whopping 300% in a month. A recent rally in quantum computing stocks has fueled QUBT stock as well. 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. Which 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 the 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 QUBT stock. Furthermore, a $2.7 billion government funding for quantum computing has boded well for these stocks.

Quantum Computing Inc. (QCi) specializes in creating quantum computers that are affordable, designed to operate at room temperature, and use low power. The company is in the development stage with limited revenue. The company’s product line includes the Dirac-3 quantum computer, EmuCore – a reservoir computing product, and a frequency converter, among others. The company is focused on four key verticals – high-performance computing, cybersecurity, imaging, and sensing.

While quantum computing shows significant promise, it remains in a developmental stage and is not yet ready for widespread practical implementation across industries. QCi’s current revenue base of $386k in the last twelve months is trivial. Like most of the other quantum computing stocks, QUBT is a high-risk and high-growth potential 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 $25 million in the last twelve months. As an investor, the bet will be on the future potential of quantum computing and QCi’s place in it. Also, look at What’s Behind The 500% Rise In QBTS Stock?

Looking at its past performance, QUBT stock, with over 1,400% gains this year, has fared better than some of its peers, including RGTI and QBTS. The recent surge in QUBT stock can be attributed to the company winning a contract from NASA. The space agency has selected QCi’s Dirac-3 to assist with its sophisticated imaging and data processing requirements. ^[1]

The large decline for QUBT on Thursday aligned with the broader cut in quantum computing stocks. These stocks are speculative, given that the technology is still years away from widespread implementation. They fared well primarily after the Google Willow update, and continued their run along with the broader markets. However, the broader markets took a hit after the U.S. Fed turned hawkish for 2025. The inflation may be tougher to tame in the coming months than earlier anticipated. This doesn’t bode well for the markets, and investors dumped the speculative stocks. For those who have conviction in quantum computing growth, the recent decline offers an entry point while those who anticipate deeper cuts in the markets, are likely to wait for even lower prices. Nonetheless, the recent agreement with NASA should drive investor optimism and potentially open the way to get more customers.

Notably, the increase in QUBT stock over the last six-year period has been far from consistent, with annual returns being considerably more volatile than the S&P 500. Returns for the stock were -49% in 2019, 129% in 2020, -50% in 2021, -56% in 2022, and -40% 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 12/20/2024
[2] Cumulative total returns since the end of 2016

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1. QCi’s Press Release, Dec 17, 2024 [↩]