Why D-Wave Quantum Stock Jumped 40% Last Month
Shares of D-Wave Quantum Inc. (QBTS +3.61%), a quantum computing company, spiked in April after Nvidia announced new artificial intelligence models that can make quantum computing more efficient and less prone to errors.Nvidia said the new open-source AI models, called Ising, could act as an “operating system” for quantum computers, calibrating them to make them more accurate than they are now. The news sent quantum computing stocks soaring last month, including D-Wave Quantum, which gained 40.5%.
For comparison’s sake, the S&P 500 rose 9.6% and the tech-heavy Nasdaq-100 was up 14.3% last month.
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Accelerating quantum computing’s reliability
One of the biggest problems with quantum computing right now is that they use fragile quantum bits, called “qubits,” that can be easily comprised by outside interference. This can make quantum computing prone to errors, so reducing them is one of the key focuses of tech companies. Nvidia’s Ising could be a big leap forward in this space.
While many tech companies are developing hardware to make quantum computing more reliable, Nvidia is taking a unique approach in using AI models to calibrate quantum computing processors, which the company said results in error-correction decoding that’s 2.5 times faster and 3 times more accurate than traditional systems.
In short, Ising could make quantum computers far more useful very soon. That’s great news for D-Wave Quantum, which makes quantum computers for customers and sells cloud-based quantum services.
If quantum computing becomes more reliable because of Ising, it could eventually help D-Wave’s services and hardware. But the bigger picture here is that Ising could help move quantum computing out of more theoretical use cases and into more practical usefulness.
D-Wave QuantumToday’s Change(3.61%) $0.74Current Price$21.23Key Data PointsMarket Cap$7.6BDay’s Range$20.16 – $21.7252wk Range$6.82 – $46.75Volume380KAvg Vol27MGross Margin82.59%
More insights are on the way
D-Wave will report its first-quarter results on May 12, and analysts’ average consensus estimates are calling for about $4.1 million in sales and a loss of $0.08 per share.
Those results would be significantly worse than its sales of $15 million and a loss of about $0.02 in the year-ago quarter. But it’s important to point out that D-Wave financial results can be lumpy because selling large quantum computing systems to customers is often inconsistent. For example, while new deals can be made in one quarter, the revenue won’t come until later, when the quantum computing systems are delivered.
That’s one of the challenges with being a D-Wave investor — or any quantum computing stock right now — because commercial sales aren’t as consistent as those of many other tech hardware and services.
Still, with Nvidia’s new Ising potentially accelerating the usability of quantum computing, D-Wave and other quantum computing companies should be optimistic that this tech’s potential could be fully unlocked soon.
Editor’s Note: A previous version of this article reported incorrect gains for the S&P 500 and Nasdaq-100 in April.