Quantum Computing Stocks Are on Fire: 3 Stocks to Watch

Key Points

• Quantum computing stocks are surging, with some gaining well over 200% YTD, driven by advancements, partnerships, and growing investor interest.
• IonQ leads the sector with cutting-edge trapped-ion technology, significant contracts, and ties to the booming AI market.
• Quantum Computing Inc. and D-Wave Quantum are gaining momentum but remain largely speculative plays with unproven profitability.

Quantum computing stocks have been soaring lately, with some names doubling or even tripling in value year-to-date. This remarkable surge has been fueled by a mix of industry advancements, significant partnerships, and increased investor interest, positioning quantum computing as one of the most exciting yet speculative tech sub-sectors to watch. While the industry is still in its infancy, the potential for applications in fields like drug discovery, cryptography, and artificial intelligence is driving immense enthusiasm. 

Let’s dive into what’s fueling this rise and look at three standout companies in the space.

IonQ Inc.: Leading the Quantum Revolution

IonQ NYSE: IONQ has emerged as the early dominant player in the quantum computing space, with a market capitalization of $8.95 billion and its stock skyrocketing 195% YTD, recently hitting an all-time high of $37.28. Founded in 2015, IonQ’s cutting-edge technology is built on trapped-ion systems, a promising approach to scalable and fault-tolerant quantum computing. The company’s momentum has been driven by a series of high-profile developments over the previous twelve months, including a $54.5 million contract with the U.S. Air Force Research Lab and a partnership with the South Korean government to foster its quantum market.

IonQ has also capitalized on the booming AI market by collaborating with Zapata Computing, leveraging Nvidia's CUDA-Q platform, and testing large language models on its own quantum systems. This synergy with AI has allowed IonQ to tap into two transformative tech sectors simultaneously. Additionally, IonQ repeatedly raised its revenue outlook throughout 2024, signaling confidence in its growth trajectory and solidifying its position as an industry leader.

Despite these achievements, the company remains unprofitable, with much of its revenue coming from research grants and government contracts. Its valuation of 238 times sales and an RSI of 76 highlight the speculative nature of this investment in its early, predominantly pre-revenue stage.

Quantum Computing: A Rising Star

Quantum Computing Inc. NASDAQ: QUBT has been one of the most dramatic performers in the sector, with its stock surging an incredible 673% YTD. This small-cap company, focused on creating accessible and affordable quantum machines, recently raised $40 million through a direct stock offering, which it plans to use for operational expansion and debt repayment. The company also achieved a key milestone by securing its first order for thin-film lithium niobate photonic chips, with deliveries expected by early 2025.

Despite its impressive stock performance and significant recent milestones, QUBT remains a pre-revenue company heavily reliant on future developments to justify its valuation. The company represents a high-risk, high-reward opportunity for investors, symbolic of the quantum sector’s broader speculative appeal.

D-Wave Quantum: A Veteran With Momentum

D-Wave Quantum NYSE: QBTS, one of the earliest players in the quantum computing industry, has seen its stock rise 243% YTD. Founded in 1999, D-Wave has developed and sold quantum computers and generates incremental revenue through its quantum computing-as-a-service (QCaaS) platform. In its Q3 2024 earnings report, D-Wave posted a 41% year-over-year increase in QCaaS revenue to $1.6 million. However, the company also reported a 41% year-over-year rise in net losses to $22.7 million, underscoring the financial challenges of scaling quantum technology.

D-Wave’s long-standing presence and steady revenue growth make it a unique player in the quantum space. Still, like its peers, it remains unprofitable and reliant on external funding to fuel its operations. Its achievements highlight the industry's potential while also reflecting the hurdles that must be overcome for sustained success.