The Quantum Computing Industry Is Crowded. Why D-Wave, IonQ, and Rigetti Are a Buy.

Cantor Fitzgerald analyst Troy Jensen initiated coverage on shares of Rigetti Computing, D-Wave Quantum, and Quantum Computing. (ANGELA WEISS/AFP via Getty Images)

Even the most dogged supporters of quantum computing admit that the technology has yet to reach its full potential—despite mounting enthusiasm from investors and the scientific community alike.

So it makes sense that some Wall Street analysts still see it as a gamble. But quantum is “one of the most highly coveted technical milestones with enormous economical implications,” according to Cantor Fitzgerald analyst Troy Jensen, who issued his first ratings on shares of four pure-play quantum companies.

It’s the same refrain investors have been hearing for months, as quantum developers stress the technology’s applications in the scientific realm. Quantum computers use subatomic particles like electrons and photons to solve problems. While they have gradually broken out of a laboratory setting, it is unclear when they will be widely available.

Consulting firm McKinsey said in its latest industry report that quantum is expected to have an outsize impact on fields like life sciences and finance. However, this will likely be years in the future: The firm projects the industry will be valued at between $28 billion and $72 billion by 2035.

Quantum stocks have had “meaningful appreciation” and trade at a steep valuation to any near-term revenue or earnings forecast, Jensen pointed out—even as pure plays remain unprofitable.

The analyst initiated coverage on D-Wave Quantum at Overweight with a $20 price target. In his eyes, D-Wave is “the only public company delivering commercially deployed quantum systems with near-term revenue visibility.”

CEO Alan Baratz has been an outspoken advocate of quantum, sometimes to his own detriment. D-Wave stock cratered during Nvidia’s annual developer conference in May as investors reacted to what they believed were undelivered promises. The selloff occurred just days after D-Wave published a peer-reviewed paper showing its Advantage2 system’s edge over a classical supercomputer in solving a materials simulation problem.

While the paper was meant to mark a milestone for D-Wave as well as the industry as a whole, pushback from one particularly vocal group of scientists weighed on shares, as they argued the quantum supremacy claims didn’t hold up.

D-Wave, however, has found a believer in Jensen.

“Unlike most claims, these problems were useful and unsolvable by classical machines,” the analyst wrote. “This differentiates D-Wave technologically, showing immediate applicability rather than theoretical performance.”

Profitability has been a sticking point for D-Wave and peers. However, the company’s financials are improving. Jensen noted that revenue spiked to $15 million in the first quarter of 2025, up from $2.5 million a year earlier, with gross margins expanding to 92.5% and adjusted Ebitda losses halving.

Jensen is equally bullish on Rigetti Computing, which he also initiated at Overweight, with a $15 price target. Rigetti is one of several companies developing superconducting quantum systems, an approach favored by the likes of IBM and Microsoft.

It’s easy to discount Rigetti as a small fish in a big pond, but Jensen believes the competitive ecosystem “positions Rigetti to benefit from the efforts of others” as its well-funded counterparts make technological advancements.

It seems collaboration is key. Rigetti unveiled a partnership with Taiwan-based Quanta Computer earlier this year, with the collaborators vowing to invest at least $250 million over a five-year period to develop quantum machines.

For now, Rigetti has established itself as a “pioneer in superconducting quantum architecture,” with an approach that favors rapid innovation, Jensen said. He conceded that the stock floundered in 2022 and 2023—partially due to the company’s fundamentals, but only compounded by the resignation of founder Chad Rigetti from the CEO position in 2022.

However, the share price has rallied since late 2024, rising more than 1,000% in the last 52 weeks. With Rigetti in “the very early innings” of commercializing its technology, there is room for further upside, Jensen argued. The analyst believes Rigetti can capture 15% of the quantum hardware, software, and services market by 2035.

Jensen also initiated coverage on IonQ with an Overweight rating and $45 price target, dubbing it “a compelling investment case.” The company stands at the intersection of quantum computing and networking, supported by a recent spate of acquisitions including a controlling stake in Swiss quantum-cryptography company ID Quantique.

So what makes the stock worth a buy? In addition to its “rapid commercial momentum,” with strategic partnerships and sales around the globe, the company’s financial position gives wings to its long-term aspirations, Jensen writes.

The company reported $697 million in cash and cash equivalents in the first quarter of 2025, bolstered by a $372 million equity offering. This gives it “one of the strongest balance sheets in the quantum industry,” Jensen asserted. “This capital buffer allows IonQ to continue investing aggressively in product development, global expansion, and strategic M&A.”

Everyone can’t be a winner, as evidenced by Jensen’s Neutral rating and $15 price target on Quantum Computing stock. Shares were up 4.3% to $19.45 on Wednesday, with the target indicating that shares could fall 23% from their current price.

There are some things to love, such as the company’s dual revenue streams. In addition to commercial quantum systems, Quantum Computing intends to make a variety of electrical components at its foundry in Arizona. The business not only boasts high margins, but contributes to the company’s efforts to establish a domestically-sourced quantum supply chain, Jensen said.

Jensen’s hesitation stems from the company’s technology of choice. The analyst is of the opinion that photons—the particles that make up the visible light spectrum and act as the basic units of information in some quantum systems—represent “a more challenging approach.”

While the technology can operate at room temperature, making for easier adoption on a wide scale, photons are easily lost and difficult to control. Jensen noted that it has proven difficult to generate reliable entangled photons, which share a single quantum state. As a result, the technology requires “highly complex error correction schemes.”

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com