Just when you thought the quantum computing trade was a bubble that was about to go bust for good, the broad basket of names went on to enjoy a robust bounce, with D-Wave Quantum (NYSE:QBTS) rocketing more than 50% from its lows of November. Undoubtedly, the volatility facing quantum computing stocks really has worked in both directions! And while every big plunge seems to feel the same, I do think that it might still be early days for some of the quantum innovators, especially if the technology is, in fact, approaching some sort of “inflection point” in the coming year.
With a recent analyst starting shares of D-Wave Quantum as a buy, I think there’s plenty of reason to go against the grain, so as long as you know what you’re signing up for with the hyper-volatile, pre-revenue quantum computing pure-plays as they look to shift gears from pre-revenue to commercialization. If the growth spikes, so too could shares, even if investors are overly concerned about valuations across the board.
The market turned against AI and growth. But quantum stocks have shown signs of life in recent weeks
Even in times of industry-wide skepticism or bubble busts, there can be winners that arise. The key is picking the winners. And while it’s hard to do so, I do think that D-Wave Quantum stands out as one of the names that’s more or less a must-watch if you’re looking to learn more about the state of quantum computing as it looks to approach some sort of inflection point that many folks (think Jensen Huang) have spoken of lately.
Of course, it’s hard to chase speculative momentum stocks, especially as the mood for such speculation becomes dampened going into the year’s end. Indeed, it’s almost as though investors are expecting AI and most of tech in a bubble that’s only destined for downside.
While the stakes, risks and all the sort might be elevated, and given the fact that many profound technologies do lead to speculative bubbles that burst, the big question is what inning we’re currently in. It might not be too late in the ballgame. And there may very well be a chance that we’re still bottom of the second or third, so to speak, in a more bullish scenario following that healthy correction in AI stocks back in November.
AI might be advancing, but quantum is still early days
Either way, it seems like quantum is not only in its first inning, but the ballgame may have yet to begin. The big question is when the game begins and whether investors should wait until the game actually starts (perhaps after some profits start coming in and the tech gets more advanced) before picking up a ticket.
There’s no question that an AI bust could lead to a souring of the quantum leap as well, something I noted in a prior piece. Advancement in AI is good news for the quantum innovation advancement timeline as well, in my humble opinion. Though it’s tough to factor in how AI will pull quantum innovation ahead, I do think that obtaining some exposure to the quantum pure-plays might not be the worst idea in the world, especially at a time like this, when shares have already shed around half of their value in just a few months. Arguably, if there’s a time to be adding to the quantum stocks, it’s on weakness.
Evercore ISI starts off D-Wave Quantum as an outperform
With Evercore ISI initiating coverage on D-Wave Quantum on the dip, perhaps investors might have enough reason to consider getting back into the waters despite ongoing turbulence throughout all of tech. The firm has a $44 per-share target on the stock (it’s going for $28 and change today), and cites the name as a “leading player.”
Undoubtedly, it might still be early in the game, but if you seek exposure to the tech, I do not doubt Evercore ISI’s analysis. In fact, I think it might be a bold contrarian call that proves correct, especially if a “tectonic shift” or inflection point (whatever you want to call it) is up ahead.
Not only is D-Wave Quantum a “leading player,” but it’s “well-funded,” which is key to seizing the opportunity. All considered, I’m starting to warm up to D-Wave Quantum shares again, even though it might be a painful next couple of weeks as volatility persists.
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