D-Wave Quantum Inc. (QBTS) saw its shares climb to nearly $28 in early premarket trading on Friday, building on a sharp rally from the previous session. The stock closed Thursday at $25.73, representing a gain of 33.4%, following news that the company had signed a non-binding letter of intent for $100 million in proposed U.S. government funding. The deal would grant the Commerce Department an equity stake in the quantum computing firm.
Quantum Computing Gets Federal Boost
The funding is part of a broader $2 billion federal initiative involving nine quantum computing companies, as Washington prioritizes the sector in its strategic competition with China. Quantum computing, which leverages quantum mechanics to process data in fundamentally new ways, is seen as a critical technology for national security and economic competitiveness.
Deal Details and Dilution Concerns
Under the proposed terms, D-Wave would issue $100 million in common stock to the Commerce Department upon finalization of definitive documents. While the investment would provide a significant cash infusion, it also introduces dilution risk for existing shareholders. The company plans to use the proceeds to advance its annealing and gate-model quantum systems, including a 100,000-qubit annealing project and a 10,000-qubit gate-model system. Qubits are the fundamental units of quantum information.
Market Context and Industry Reaction
The announcement comes amid a flurry of quantum-related awards. IBM is slated to receive $1 billion to spin off a quantum chip company called Anderon, while GlobalFoundries is set for $375 million. D-Wave, Rigetti Computing, and Infleqtion are each in line for approximately $100 million. Infleqtion CEO Matthew Kinsella told Reuters, "Quantum computing is coming much faster than anybody thinks."
Wall Street Sentiment and Analyst Views
Wall Street had already turned bullish on D-Wave prior to the federal funding news. Rosenblatt analyst John McPeake maintained a Buy rating and a $43 price target following the company's latest quarterly results, citing improved bookings and anticipated machine sales later in 2026, according to TipRanks at Markets Insider.
Risks and Uncertainties
Despite the positive momentum, significant risks remain. D-Wave cautioned that the award may not close, could be delayed, may depend on milestone achievements, or could be subject to government funding availability. The company also flagged dilution from the share offering. Additionally, quantum computers still face technical hurdles, including high error rates that limit performance, as noted by Reuters.
Financial Health and Operational Performance
D-Wave ended March with $588.4 million in cash and marketable securities, providing a cushion for its operations. However, the company's first-quarter revenue slumped 81% to $2.9 million, and its net loss widened to $18.4 million. On a positive note, bookings—customer orders expected to convert into future revenue—rose to $33.4 million, signaling potential future growth.
Market Outlook
Friday's trading session will be closely watched as investors assess the final terms and overall risk sentiment. If the stock holds above early premarket levels, it suggests that market participants are placing a premium on the government's involvement. Conversely, a pullback would reinforce the view that quantum stocks remain volatile theme plays, regardless of the presence of a government shareholder.
