D-Wave Quantum's (QBTS 4.92%) stock greatly outperformed IonQ's (IONQ 1.76%) stock over the past year. The two companies are taking very different approaches to the burgeoning field of quantum computing, and whether either will emerge a long-term winner is still up in the air.
Let's look at which quantum stock could offer investors the best opportunity to be a good investment in this sector over the long haul.
Image source: Getty Images.
D-Wave Quantum: Taking two shots on goal
D-Wave Quantum is taking a two-pronged approach when it comes to quantum computing. The company is a leader in quantum annealing, but it has recently started work on developing a more traditional gate-based system.
Annealing is a more specialized approach to quantum computing used to solve optimization problems, where systems look to find the optimal state for a particular problem by settling on the best solution. In many ways, it's like using AI ASICs to power artificial intelligence (AI) workloads rather than general-purpose graphics processing units (GPUs).
ASICs are very good at the specific tasks for which they have been hardwired, like inference, but they lack the flexibility and adaptability of GPUs. Similar to how an ASIC is designed for one specific task, annealing is designed for one class of problems: finding the lowest-energy state of a mathematical problem, which represents the most optimal solution.
NYSE: QBTS
Key Data Points
Given its specialized nature and lesser complexity, annealing technology is much further along and is starting to become commercialized, as it is good at tasks such as supply chain optimization. D-Wave has over 100 paying customers and is now starting to see its revenue and bookings growth begin to accelerate. However, annealing isn't the holy grail of quantum computing.
As such, D-Wave has recently begun an aggressive push into the gate-based systems that other companies are pursuing. It will use fluxonium qubits with its gate-based systems, which it contends are the closest to quantum annealing. It also recently purchased Quantum Circuits, after raising cash last year through two large at-the-market secondary stock offerings, to help accelerate its gate-based efforts.
IonQ: The king of accuracy
IonQ is taking a traditional gate-based approach to quantum computing, but it is doing it in a slightly different way by using trapped-ion technology. Instead of making lab-based qubits, the company uses actual atoms. Atoms by nature are identical to each other, and thus more stable. Right now, one of the biggest obstacles in quantum computing is that the technology is very error-prone because qubits are in what is known as a state of superposition.
Superposition is why quantum computers can perform calculations exponentially faster than traditional computers. However, because qubits are not in a fixed state like traditional computing bits, they are in a much more vulnerable state, prone to being impacted by outside forces like vibrations and temperature changes that can disrupt them. IonQ's trapped ion technology has proven to be one of the least error-prone, achieving 99.99% two-qubit fidelity (accuracy).
NYSE: IONQ
Key Data Points
Meanwhile, the company is also looking to build an entire quantum computing ecosystem. It has designed software for partial error reduction called Clifford Noise Reduction, while it is also developing Quantum Error Correction (QEC) codes to help protect quantum information when qubits run into problems.
Its acquisition of LightSynq gave it photonic interconnect technology to help scale its systems, while its deal for Oxford Ionics will help it shrink the size of its quantum computers. Deals for Capella and Vector Atomic, meanwhile, give it satellite-based distribution and quantum sensing technology.
The verdict
D-Wave and IonQ are two of the better pure-play quantum computing stocks. D-Wave looks as if it can carve a nice niche with quantum annealing, but it is further behind with the more lucrative gate-based approach.
IonQ, meanwhile, has become a leader in accuracy and has made aggressive acquisitions to help it build out an entire quantum ecosystem. I like where IonQ is and its approach, and as such, I think it has the more long-term upside potential. That said, both remain high risk-reward stocks.
