Quantum Computing Stocks are on the Rise!

Quantum computing stocks saw a significant increase on Thursday, according to reports published by the Wall Street Journal, as the U.S. government discussed plans to acquire stakes in several companies in exchange for federal funding.

IonQ (IONQ), Rigetti Computing (RGTI), D-Wave (QBTS), and Quantum Computing (QUBT) stocks experienced notable gains as they were among the companies involved in the discussions. IonQ rose by 9% at the market opening, Rigetti increased by 11%, D-Wave surged by 18%, and Quantum Computing gained approximately 10% in value.

The government plans to provide at least $10 million in funds to each company through the Chips Research and Development Office. These investments are part of an unusual trend led by the U.S. Department of Commerce, in which the government acquires stakes in large U.S. firms (such as Intel (INTC) and MP Materials (MP)).

The U.S. government's interest in quantum computing is not new. The National Quantum Initiative Act, signed by President Trump in 2018, promised $1.2 billion in federal funding for quantum research. During President Biden’s term, funding for some federal quantum computing programs was authorized under the CHIPS and Science Act. Additionally, during the Trump administration, a bipartisan group of U.S. senators proposed a bill to reauthorize the 2018 law and commit an additional $2.7 billion in funding for the development of quantum computing applications.

In September, Rigetti signed a $5.8 million contract with the U.S. Air Force and the Department of Energy began a partnership with IonQ. According to the Wall Street Journal, new discussions about government equity investment are taking place within the framework of the Trump administration's restructuring of commitments under the CHIPS Act.

Developed practical quantum computers will have the ability to solve problems that would take "classic" computers billions of years. However, quantum computers face significant challenges due to their fragility and the presence of errors, which hinder the industry’s development of practical use cases.

Quantum stocks have garnered value over the past year thanks to technological breakthroughs in quantum chips and computers by major names such as Google (GOOG) and IBM (IBM). Bank of America (BAC) predicts that the quantum market could grow from $300 million in 2024 to $4 billion by 2030.

In mid-October, stocks of quantum firms like IonQ, Rigetti Computing, D-Wave, and Quantum Computing reached record highs. JPMorgan (JPM) initiated a $1.5 trillion investment initiative over ten years, targeting industries critical to national security, including quantum computing.

However, stocks experienced significant declines over the past two weeks. Notably, on Wednesday, IonQ and Rigetti Computing saw declines of 7% and 10% respectively, D-Wave fell by 15%, and Quantum Computing dropped by 7%. Nevertheless, the value increase on Thursday reversed these losses.