Shares of D-Wave Quantum (QBTS +14.05%) blasted nearly 21% higher as of 10:39 a.m. ET today after The Wall Street Journal reported that the U.S. government may take an equity stake in several of the pure-play quantum computing companies.
Critical to national economic security?
D-Wave Quantum, along with Rigetti Computing and IonQ, were among the companies named in the Journal's report, which cited anonymous sources. The companies would reportedly give the government a stake in exchange for funding awards of at least $10 million. The Journal report indicated that other tech companies may try to compete for government funding, and the discussions are being led by a former quantum executive Paul Dabbar, who is now deputy secretary of the U.S. Department of Commerce.
Image source: Getty Images.
The Journal managed to reach a spokesperson from Rigetti, who said the company has been engaging with the government on the potential for funding. D-Wave's head of government relations, Allison Schwartz, also told the Journal the company wants to build quantum systems that can solve problems for the government.
NYSE: QBTS
Key Data Points
The Trump administration has taken several equity stakes in publicly traded companies this year, so this is not exactly a new concept. Furthermore, the news comes right after JPMorgan Chase, the country's largest bank, pledged to invest billions in companies of national economic security, specifically listing quantum as a potential sub-area.
Quantum increasingly viewed as critical technology
This is clearly good news for investors because quantum computing is being viewed as critical for the country in a similar way that rare-earth materials are. Not only could this lead to more investment for the sector, but having the government as a shareholder makes investors feel more protected because it isn't going to want its investment to fail.
While this is certainly good news, investors should be cautious with D-Wave because commercialization of quantum computing is still not a guarantee and the stock is already up over 2,650% in the past year. I'd still keep positions smaller and more speculative for now.
