Quantum Computing Stocks Outperform S&P 500 in 2024

The quantum computing sector is demonstrating explosive growth despite being in what industry observers describe as “early innings” of development. D-Wave leads the pack with a staggering 165% year-to-date return, while Rigetti and IonQ have posted impressive gains of 56% and 48% respectively. This performance dramatically outpaces the S&P 500, reflecting investor enthusiasm for what many see as the next frontier in computational technology. The surge mirrors patterns seen during the early stages of the AI boom, with investors anticipating similar transformative potential from quantum computing.

Current market valuations reflect this optimism rather than present financial performance. D-Wave’s $3.1 million in quarterly sales contrasts with its approaching $10 billion market capitalization, while IonQ’s $20.7 million Q2 revenue seems modest against its $20 billion valuation. Rigetti’s $1.8 million quarterly revenue represents a 41.6% year-over-year decline, yet the company maintains a $10 billion market cap. These disparities highlight the high-risk, high-reward nature of investing in quantum computing stocks, which analysts compare to backing early-stage startups with gargantuan potential.

D-Wave has distinguished itself by claiming to be the only company building both annealing and gate-model quantum computers, a dual approach that could accelerate the path to widespread commercialization. The Canadian company closed its second quarter with an $819 million cash balance and demonstrated robust 42% year-over-year revenue growth. More importantly, D-Wave has maintained momentum with over 100 paying customers for four consecutive quarters, signaling growing commercial adoption.

The company’s strategic focus includes expanding international partnerships, particularly with Asian companies, while boosting total bookings to $1.3 million—a 92% year-over-year increase. D-Wave’s ability to secure contracts with both new and returning customers for commercialization and research applications suggests the company is successfully bridging the gap between theoretical quantum computing and practical business applications. This commercial traction, combined with substantial cash reserves, positions D-Wave to weather the development phase while pursuing market opportunities.

IonQ, widely regarded as an industry leader, has pursued an aggressive growth strategy through strategic acquisitions including Oxford Ionics, Lightsynq, and Capella—moves designed to strengthen its technological moat. The company’s 82% year-over-year revenue surge in the second quarter exceeded the top end of its guidance, demonstrating accelerating business momentum despite the early stage of quantum computing commercialization.

Perhaps most significantly, IonQ announced a groundbreaking 20x speed-up in quantum-accelerated drug development achieved through partnerships with pharmaceutical giant AstraZeneca (NASDAQ:AZN), cloud computing provider AWS, and chipmaker Nvidia (NASDAQ:NVDA). This collaboration represents one of the most tangible demonstrations of quantum computing’s practical potential, particularly in computationally intensive fields like pharmaceutical research. The partnership could fuel meaningful revenue growth as quantum computing becomes more commercialized, providing IonQ with a competitive edge in applied quantum solutions.

Rigetti Computing is making significant technological strides despite facing financial challenges. The company recently launched what it describes as the industry’s largest multi-chip quantum computer for general availability, marking an important milestone in scaling quantum systems. According to CEO Dr. Subodh Kulkarni, the company has achieved remarkable technical progress, stating: “Just 6 months after our record performance with Ankaa-3, we’ve once again halved our error rates with Cepheus-1-36Q.”

While Rigetti reported a $39.7 million net loss for the quarter and a 41.6% year-over-year revenue decline to $1.8 million, the company maintains $571.6 million in available cash to support ongoing operations and research. Dr. Kulkarni emphasized the strategic importance of these technological improvements, noting that “quadrupling our chiplet count and significantly decreasing error rates is the clear path towards quantum advantage and fault tolerance.” This focus on error reduction and scalability aligns with industry consensus about the requirements for achieving practical quantum advantage.

The quantum computing sector represents a classic emerging technology investment scenario—substantial current risk balanced against potentially revolutionary long-term rewards. Bank of America’s characterization of quantum computing as a generation-defining technological race underscores the strategic importance that financial institutions are attributing to this space. The parallel to the early days of AI investing is particularly compelling, given how quickly that sector transformed from speculative to essential.

For investors, the current landscape offers exposure to three distinct approaches: D-Wave’s dual-technology commercialization strategy, IonQ’s acquisition-driven growth with practical applications, and Rigetti’s focus on technological scaling and error reduction. Each company maintains substantial cash reserves—$819 million for D-Wave, $571.6 million for Rigetti—providing runway to continue development despite current financial losses. As these companies continue to forge partnerships, reduce error rates, and demonstrate practical applications, the gap between current financial performance and market valuations may narrow through accelerated commercialization.