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Quantum computing is still in its early innings, but investors aren’t waiting on the sidelines. D-Wave (NYSE:QBTS), IonQ (NYSE:IONQ), and Rigetti Computing (NASDAQ:RGTI) have blown past the S&P 500 year-to-date as investors salivate over the innovative technology’s long-term potential.
Artificial intelligence breakthroughs have pushed quantum computing closer to commercialization, and investors have seen the tremendous gains from some AI stocks. A Bank of America (NYSE:BAC) analyst believes quantum is “the most important technological race of our generation,” which puts it in the same territory as the AI frenzy, once the technology becomes more commercialized.
Big promises like that have been sufficient for many investors, as they wait for quantum computing stocks to produce results that live up to the hype.
Key Points
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Quantum computing stocks have beat the stock market year-to-date, but big gains may be ahead.
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The three quantum computing leaders are making acquisitions and technological progress while forging new partnerships.
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D-Wave (QBTS)
D-Wave has been a market leader with its 165% year-to-date return. The company claims it’s the only one in the world that is building annealing and gate-model quantum computers, which can accelerate the path to widespread commercialization.
D-Wave closed out the second quarter with an $819 million cash balance and 42% year-over-year revenue growth. The company delivered $3.1 million in sales compared to a market cap that is approaching $10 billion. D-Wave and the other quantum computing stocks on this list are the equivalent of investing in an early-stage startup that has substantial risk and gargantuan potential rewards.
The Canadian company signed several contracts with new and returning customers for commercialization and research applications. It has partnerships with international companies, with a strong focus on Asian companies. D-Wave has had more than 100 paying customers for the past four quarters and boosted its total bookings to $1.3 million, representing a 92% year-over-year increase.
IonQ (IONQ)
IonQ has gained 48% year-to-date and recently eclipsed a $20 billion market cap. It’s widely regarded as the leader in the quantum computing industry. The company has made several acquisitions to boost its moat, such as Oxford Ionics, Lightsynq, and Capella.
Revenue surged by 82% year-over-year in the second quarter, which exceeded the top end of guidance. Its $20.7 million in Q2 revenue pales in comparison to its $20 billion market cap, but growth can happen quickly and suddenly in this industry.
IonQ also announced that it achieved a 20x speed-up in quantum-accelerated drug development with AstraZeneca (NASDAQ:AZN), AWS, and Nvidia (NASDAQ:NVDA). This project has resulted in key partnerships that can fuel meaningful revenue growth for IonQ as quantum computing becomes more commercialized.
Rigetti (RGTI)
Rigetti is the final big-name on this list, with its $10 billion market cap and 56% year-to-date return. The company aims to develop quantum computers that can “scale to solve problems of staggering computational complexity at unprecedented speed,” as noted on its Investor Relations page.
Revenue only came in at $1.8 million in the second quarter, which represented a 41.6% year-over-year decline. A $39.7 million net loss for the quarter wasn’t encouraging, but it reflects how early it is in the quantum computing industry. Rigetti has $571.6 million in available cash to assuage its losses.
Rigetti’s multi-chip quantum computer was recently released for general availability. It’s the industry’s largest multi-chip quantum computer. Its technology is near or at the top of the pack, with Rigetti CEO Dr. Subodh Kulkarni sharing some remarks about the technology’s enhancements.
“Just 6 months after our record performance with Ankaa-3, we’ve once again halved our error rates with Cepheus-1-36Q. We believe quadrupling our chiplet count and significantly decreasing error rates is the clear path towards quantum advantage and fault tolerance,” Dr. Kulkarni said when sharing Q2 results.
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