Shares of quantum companies have risen—the U.S. government has invested in them. Should we follow their example?

Shares of three quantum companies— Rigetti, D-Wave, and Quantinuum —rose on September 8 following the completion of deals with the U.S. Department of Commerce. Under these agreements, the quantum technology developers will receive government funding, and in exchange, the government will acquire minority stakes in their companies.

The U.S. will invest $100 million in each of the three companies as part of a program to support promising technological developments that have not yet reached the mass production stage.

Following the announcement of the completion of deals with the Department of Commerce, shares of quantum computer developers Rigetti rose 4% on Tuesday, D-Wave rose 6.57%, and Quantinuum rose 1.6%. The agreements provide for funding for these companies in the form of research and development grants under the CHIPS and Science Act of 2022. In return, the U.S. government will receive a minority stake in each company proportional to the amount of funding, according to Barron’s.

The agreements were signed as part of a government investment program announced in May. The U.S. Department of Commerce’s initiative at that time came as President Donald Trump’s administration was preparing an executive order to support the quantum industry, sources told The Wall Street Journal.

Federal support signals that quantum technologies are gaining traction, according to Citi analyst Fatima Bullani, as quoted by Barron’s. Although quantum technologies are viewed as a national security issue due to the threat they pose to modern encryption, Washington also sees this as an opportunity to establish global market dominance, Barron’s reports. “If the world’s most influential government isn’t just talking the talk but also walking the walk with investments, then this is clearly a matter of national importance,” says Bullani. According to her, this boosts confidence that the technology truly has the potential for development, scaling, and commercial application.

Not all companies, however, agreed to the Ministry of Trade’s terms. Google’s Quantum AI research division walked away from the deal because, according to a spokesperson, the financing terms could have hindered engineering efforts, Barron’s reports.

Despite the gain on September 8, Rigetti’s shares have lost more than 28% since the start of the year, D-Wave’s have fallen 32%, and Quantinuum—which went public as recently as early June—has dropped nearly 16% from its IPO price. Among the factors putting pressure on the stocks of quantum companies—firms whose valuations are based on future cash flows—analysts at 24/7 Wall St. cited rising Treasury yields.

On Wall Street, however, the outlook for quantum companies is viewed positively: the consensus recommendation for all three firms—Rigetti, D-Wave, and Quantinuum—is “buy.” Analysts’ average price targets for Rigetti shares imply an increase of nearly 87% from the last closing price; for D-Wave shares, 102%; and for Quantinuum shares, 92%.

IBM is also expanding its quantum computing business in the U.S. market in partnership with the U.S. government. The company is launching the first quantum chip manufacturing facility in the U.S., which will receive $2 billion in joint investment from IBM and the Department of Commerce.

Quantum technologies can significantly accelerate data processing compared to traditional computing and have the potential to solve complex problems much faster than even the most powerful modern supercomputers. In addition to quantum computing, other quantum technologies are at various stages of development—including highly sensitive quantum sensors and quantum data transmission networks.

This article was AI-translated and verified by a human editor