What’s Behind the 500% Surge in QBTS Stock?

The stock price of D-Wave Quantum (NYSE: QBTS), a quantum computing company, has risen a whopping 500% in a month. D-Wave specializes in developing quantum computers that use quantum annealing technology to solve complex optimization challenges. Unlike traditional computers, which work with binary bits that can only be one or zero at any given time, quantum computers use qubits that can exist in multiple states at the same time. This allows quantum computers to perform complex calculations with fundamentally different computational capabilities. This allows quantum computers to process large amounts of data and examine countless possible outcomes at once. Also check out another quantum computing company: What’s Behind RGTI Stock’s 500% Surge?

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, as more errors occur as the system becomes more complex and the number of qubits increases. As with any new futuristic technology, things can be volatile at times. However, if you want to create an uptrend with a smoother trajectory than a single stock, consider the following High quality portfolio, The company has outperformed the S&P and has returned >91% since inception.

In particular, there have been some recent advances in quantum space with Google’s Willow chip and Amazon’s Quantum Embark. This has fueled the rally in quant stocks overall, including QBTS stock. Additionally, the $2.7 billion in government funding for quantum computing bodes 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 that can solve complex problems with up to a million variables. D-Wave is the first company to offer quantum computing called Advantage. The company’s other offerings include Leap – a quantum cloud service and Ocean – open source programming tools that help develop quantum applications.

Although quantum computing is promising, it is still at a developmental stage and is not yet ready for widespread practical implementation across all industries. D-Wave’s current trailing twelve month revenue base of $9.4 million is trivial. Like most other quantum computing stocks, QBTS is a high-risk, high-growth story with several factors at play, including technological improvements and costs. The company could potentially sell several quantum computers in the coming years, which could further boost its stock price. However, losses remain a key factor. The company reported a trailing 12-month operating loss of $74 million. As an investor, you are betting on the future potential of quantum computing and D-Wave’s place in it.

Looking at past performance, QBTS stock has been quite volatile and underperformed compared to the broader markets. Stock returns were -86% in 2022 and -39% in 2023. In contrast, the Trefis High Quality Portfolio is significantly less volatile with a collection of 30 stocks, and this is the case outperformed the S&P 500 every year in the same period. Why is that? As a group, the stocks in the HQ Portfolio offered better returns with lower risk compared to the benchmark index. less of a rollercoaster ride, as the key performance indicators of the HQ portfolio show.

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