Quantum computing may be in its early stages, but investors are already picking winners. Many of today's perceived winners and losers in the quantum computing space probably won't be the same five or even 10 years from now.
One stock that has already given investors a great return, though, might still be the one to own for the long term. Let's see why.
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A strong balance sheet is key
D-Wave Quantum (QBTS -5.26%) stock took off this year. Its rise has been as much about a wave of investor optimism and excitement for all things quantum computing as anything company-specific. The quantum computing sector, as a whole, has soared in recent months.
But D-Wave Quantum has a couple of advantages compared to other quantum companies. Its sixth-generation Advantage2 quantum annealing system is a leader in the industry with over 4,400 qubits. Qubits, or quantum bits, make it possible to investigate multiple problems at once.
Advantage2, which is now commercially available, was built "to address real-world use cases in areas such as optimization, materials simulation, and artificial intelligence." It's suited for optimization problems, including scheduling, logistics, and material science simulations, where optimization is critical.
A commercially available system is an important milestone for the business. A major risk for investors with any start-up or early-stage company is that operating funds could run out before revenue generation begins.
D-Wave has revenue coming in and, maybe more importantly, has a strong balance sheet. Over $800 million in net cash puts the company in a strong position as quantum computing gains use cases.
That said, D-Wave stock has run far and fast. It could easily retrace by a large amount in a market downturn. While buying now might make sense to start a position, building it gradually or buying in thirds may make the most sense. That way, investors can take advantage of any downswings.
