What happened

Shares of Atomera (ATOM 8.41%) skyrocketed as much as 29.6% on Wednesday, driven by the semiconductor materials developer's second-quarter earnings report. The stock backed down to a 25% gain as of 3:20 p.m. EDT.

So what

Atomera didn't blind investors with a dazzling financial performance. Your average analyst had expected a net loss of approximately $0.15 per share on top-line sales near $100,000. The company reported a loss of $0.17 per share, recording no sales at all in the second quarter.

The rocket fuel for this soaring jump came from the earnings call, where CEO Scott Bibaud explained how Atomera's computer modeling tools allowed a key customer to improve the performance of an upcoming product. The computerized development and testing allowed Atomera and the unnamed client to develop significant improvements in six weeks, and the same process would normally take three test runs of physical silicon, each one spanning as much as nine months.

A goggle-wearing technician takes a close look at a semiconductor chip.

Image source: Getty Images.

Now what

Atomera's shareholders are expecting impressive growth from this zero-revenue start. CFO Frank Laurencio guided to another quarter of revenue-free operations, followed by uncertainty and long testing periods before any prospective customer gets ready to sign actual contracts. The company's lead client is inching closer to an agreement, and other semiconductor designers are watching Atomera's development process with bated breath, hoping to take advantage of the company's quantum-engineered chip materials in the long run.

In the meantime, we're looking at a technology developer with no sales to speak of and significant operating expenses. The market cap stands at $403 million today. That valuation hinges on a lot of things going right for Atomera in the near future, and even a minor stumble along the way could destroy the cash-strapped company. I look forward to watching Atomera grow into a serious business, but I don't recommend betting the farm on this risky stock today.