4 Quantum Stocks for a Future That Is Now

A wall depicting IonQ’s patents. Jefferies analysts initiated coverage on the stock at Buy with a $100 price target. (COURTESY IONQ)

Key Points

• Quantum computing is advancing rapidly, with developers making significant technical and commercial progress toward useful machines.
• Governments are investing billions in quantum development.
• Jefferies initiated coverage on D-Wave Quantum and IonQ with Buy ratings, and Rigetti Computing with a Hold rating.

For quantum computing, the question is no longer “if,” but “when.”

While skeptics say the technology has yet to prove its full potential, quantum developers are rapidly making meaningful progress toward technical and commercial milestones. A BofA Securities report earlier this year asserted that quantum represents the biggest technological advancement since the discovery of fire. Proponents anticipate advancements in fields like medicine and finance, driven by the machines’ ability to digest enormous amounts of data.

Jefferies likens quantum’s capabilities to trying to find the answer to a question in a library. While a classical computer is like reading each book one by one, quantum creates the possibility to read every book at once, making the computers suitable for “problems that involve millions of possibilities and interactions.”

Investors should watch the space. Companies of all sizes are vying to be the first to make a “useful” machine.

While many companies have developed quantum capabilities, and some computing power is available for purchase via the cloud, quantum technology as a whole is prone to making mistakes. Honeywell-owned Quantinuum and International Business Machines are among the players that have announced progress in error correction, paving the way for larger, scalable machines.

Governments are pouring billions into quantum development in a bid to stay competitive on a global scale. The U.S. has undertaken a slate of efforts, including the Defense Advanced Research Projects Agency’s Quantum Benchmarking Initiative, which is meant to verify whether any quantum-computing approach can achieve utility-scale operation by 2033.

At the Q2B Conference earlier this month, Joe Altepeter, a program manager within DARPA’s Microsystems Technology Office, indicated the technology was taking shape faster than expected. “We think it is more likely than not that someone, or maybe multiple someones, are going to be able to make a really industrially useful quantum computer, which is not something I thought I’d be concluding at the end of 2025,” Altepeter said.

Another vote of confidence came as Jefferies initiated coverage on a handful of quantum stocks. The firm issued its first ratings on D-Wave Quantum , Rigetti Computing , and IonQ , which are viewed as three of the foremost publicly traded pure plays, on Dec. 16.

Jefferies rates D-Wave and IonQ at Buy, with price targets of $45 and $100, respectively, but it has Rigetti at Hold with a target of $3o. That is a slightly more cautious tone than Mizuho Securities, which initiated coverage on all three stocks at Outperform this month.

Jefferies cited Rigetti’s reliance on government funding, an issue CEO Subodh Kulkarni has acknowledged in interviews with Barron’s. Nearly 90% of revenue came from government entities in 2024, Jefferies noted, saying revenue remains “heavily anchored in government‑funded development and milestone‑based contracts.” That is a difference between Rigetti and its pure-play rivals, which have sold more systems to commercial clients.

Until Rigetti shows sustained growth in revenue, backlog, and consumption of quantum computing as a service, “its business will likely rise and fall with government spending,” Jefferies wrote.

Crucially, all three companies are in decent financial shape. While they continue to lose money, a closer look at the numbers indicates conditions aren’t as grim as they seem.

Rigetti and IonQ, for instance, maintain debt-free balance sheets, with IonQ’s pro-forma cash and investments swelling to $3.5 billion following a $2 billion equity offering in October. All things considered, IonQ’s balance sheet “provides substantial flexibility to fund multi-year R&D and commercialization,” Jefferies wrote.

D-Wave, meanwhile, has roughly $32 million of debt outstanding, which Jefferies calls “a modest level relative to cash.” As of Sept. 30, the company boasted a consolidated cash balance of $836 million.

IBM and Quantinuum are two other major players, both with significant corporate resources. IBM, which Barron’s profiled earlier this month, aims to deliver a fault-tolerant supercomputer that can operate in the presence of errors by the end of the decade.

Quantinuum, which is set to go public sometime in the next two years, is similarly benefiting from Honeywell’s deep pockets. At a launch event last month, the company unveiled Helios, which it dubbed “the world’s most accurate quantum computer.”

There are years to go before quantum breaks out, but expectations have already taken off. The Defiance Quantum exchange-traded fund, which counts Rigetti and IonQ among its largest holdings, has gained 38% this year, outstripping a 17% gain for the S&P 500 .

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