The U.S. Government Just Invested in These 3 Quantum Computing Stocks. Should Retail Investors Follow Suit? - The Motley Fool
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As part of its $2 billion infusion into the quantum computing sector, the U.S. government is taking equity stakes in three publicly traded pure-play quantum computing companies: D-Wave Quantum (QBTS 1.22%), Rigetti Computing (RGTI 1.77%), and Infleqtion (INFQ 2.65%). Each will receive up to a $100 million investment. Their stocks skyrocketed on the news, but should retail investors follow Washington's lead and buy in? 1. D-Wave Quantum ExpandNYSE: QBTSD-Wave QuantumToday's Change(-1.22%) $-0.34Current Price$27.48Key Data PointsMarket Cap$10BDay's Range$25.70 - $28.0552wk Range$12.75 - $46.75Volume33.9MAvg Vol30.7MGross Margin32.92% D-Wave Quantum is targeting the quantum computing market in two distinct yet intertwined ways. The company is a leader in quantum annealing, a narrow-purpose technology that can be used to find answers that are the best or close to the best ones for specific types of complex problems. While there is a wide array of computing tasks that it's not suitable for, quantum annealing excels at optimization problems, and these come up frequently in industries like logistics, finance, and defense. This specialized technology is further along in the commercialization process; D-Wave is already selling its Advantage II systems to commercial customers. Meanwhile, the company is looking to take what it learned from developing its annealing technology and apply it to create a more traditional gate-based quantum computer. It will use fluxonium qubits, a type of superconducting qubit that is similar to those it uses for its annealing technology. And through its acquisition of Quantum Circuits in January, it has added a dual-rail gate-model processor that has built-in error detection. It thinks this can help it create a system with the fidelity (accuracy) of the trapped-ion technology used by IonQ, but with the speed of superconducting qubits. D-Wave aims to use the government's investment to speed up its development of a 100,000-qubit annealing system and a 10,000-qubit gate-model system. 2.
Rigetti Computing ExpandNASDAQ: RGTIRigetti ComputingToday's Change(-1.77%) $-0.45Current Price$24.62Key Data PointsMarket Cap$8.3BDay's Range$23.62 - $25.8552wk Range$10.30 - $58.15Volume56.3MAvg Vol34.2MGross Margin-5945.49% Rigetti Computing has developed one of the fastest quantum systems, estimated to be 1,000 times faster than trapped-ion technology. However, the company's systems have struggled with accuracy, and it hasn't yet advanced to Stage B of the Quantum Benchmarking Initiative (QBI) of the U.S.
Defense Advanced Research Projects Agency (DARPA), a Pentagon-funded program to identify and support the best quantum computing technologies. Earlier this year, the company also had to delay its new 108-qubit Cepheus-1-108Q system to improve its error rate. While it did eventually make it available, its 99.1% two-gate fidelity fell short of its 99.5% median 2-qubit gate fidelity it was looking to attain. Rigetti said it will use the government's investment to fund research to tackle "major technical challenges in scaling and advancing superconducting quantum computing." 3. Infleqtion ExpandNYSE: INFQInfleqtionToday's Change(-2.65%) $-0.42Current Price$15.46Key Data PointsMarket Cap$3.5BDay's Range$14.66 - $16.4152wk Range$8.52 - $21.28Volume25.3MAvg Vol9.4MGross Margin21.04% Infleqtion went public earlier this year via a reverse merger with a special purpose acquisition company (SPAC). The company has found a niche in quantum sensing and precision timing tools, which are primarily used in the defense industry, and counts the U.S. and U.K. governments among its customers. Its products in this area include Tiqker, an optical quantum clock that can be used for hypersonic missile tracking or drone detection, and Quantum Spectrum sensing, which can detect, classify, and analyze radio frequency signals. At the same time, Infleqtion is also working to build a quantum computer. The company's big differentiator is its neutral atom technology, which makes its qubits out of individual atoms that are manipulated and cooled with lasers. This allows its systems to operate at room temperature, without the massive dilution refrigerators that superconducting quantum computers use. The company achieved 99.73% two-gate fidelity in 2024 and is looking to reach 99.9% this year. Infleqtion will receive part of the government's investment up front to continue developing its neutral-atom quantum systems, while the remainder of the funding is contingent on it hitting certain milestones. Image source: Getty Images. So are these stocks buys? While these government investments help provide support to these quantum pure plays, all three stocks remain highly speculative. D-Wave and Infleqtion both have adjacent quantum businesses that are generating revenue, but their valuations still anticipate big breakthroughs that may or may not materialize. I'm not a fan of Rigetti, given its accuracy issues, while D-Wave hasn't yet announced any fidelity milestones, and Infleqtion trails IonQ's 99.99% fidelity by a meaningful margin. As such, I wouldn't chase any of these three stocks on the huge pops that they got from what ultimately are relatively small bets by the U.S. government.