D-Wave Quantum soars after new computer launch. What’s behind the rally?
The company’s market cap has soared more than 1,200% in the LTM
D-Wave Quantum stock has nearly doubled in value since the beginning of the year. / Photo: D-Wave Quantum
Shares of D-Wave Quantum, a developer of quantum computing systems, jumped 26% yesterday, May 20, after the company launched a new quantum computer, now available to institutions and businesses in 40 countries. Over the last 12 months, D-Wave’s market value has surged more than 1,200%, but Benchmark believes the rally is being driven by speculation rather than long-term investment.
Details
Yesterday, D-Wave soared 26% on the Nasdaq to reach an all-time high of $16.50 per share. The rally began after the company announced the launch of a new quantum computing system, called Advantage2.
Compared with its predecessor, the new computer delivers a 40% increase in energy scale and a 75% reduction in noise. The latter is one of the main issues in the industry, as noise often leads to errors. Reducing noise allows for faster and higher-quality solutions for complex calculations. Advantage2 is now available in 40 countries through a cloud service, though the company has not disclosed pricing.
What analysts say
D-Wave stock is up 97% for the year to date and more than 1,000% over the last 12 months. However, Benchmark analyst David Williams is cautious about the rally, suggesting that the share price is now being driven by traders rather than investors. A gradual increase in the share price would be better for the stock, as it would indicate that more long-term investors who believe in D-Wave’s technology and ability to meet key targets were snapping up shares. This would lead to more stability and less volatility in the share price. Yesterday’s move suggests that traders are buying shares in hopes of large short-term gains or out of fear of missing out, Williams argues.
Nevertheless, all six analysts covering D-Wave have “buy” recommendations, according to MarketWatch. The market price has already surpassed their average target price of $12.83 per share.
Market development
D-Wave Quantum is the first developer to bring quantum computers from research labs to the commercial space. Its clients include Japan’s largest telecom operator, NTT Docomo, and Canadian supermarket operator Pattison Food Group.
Still, the industry is just beginning to gain momentum. In December, Microsoft unveiled a new quantum chip called Willow. Quantum startups are also in demand: Last week, QuEra Computing, a Boston-based company that specializes in quantum computers based on neutral atoms, announced it had completed a financing of more than $230 million. Israeli quantum software company Classiq has also raised $110 million in a funding round.
