Why Shares of D-Wave Quantum Are Soaring Today

Shares of D-Wave Quantum (NYSE: QBTS) blasted nearly 21% higher as of 10:39 a.m. ET today after The Wall Street Journal reported that the U.S. government may take an equity stake in several of the pure-play quantum computing companies.

Critical to national economic security?

D-Wave Quantum, along with Rigetti Computing and IonQ, were among the companies named in the Journal's report, which cited anonymous sources. The companies would reportedly give the government a stake in exchange for funding awards of at least $10 million. The Journal report indicated that other tech companies may try to compete for government funding, and the discussions are being led by a former quantum executive Paul Dabbar, who is now deputy secretary of the U.S. Department of Commerce.

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The Journal managed to reach a spokesperson from Rigetti, who said the company has been engaging with the government on the potential for funding. D-Wave's head of government relations, Allison Schwartz, also told the Journal the company wants to build quantum systems that can solve problems for the government.

The Trump administration has taken several equity stakes in publicly traded companies this year, so this is not exactly a new concept. Furthermore, the news comes right after JPMorgan Chase, the country's largest bank, pledged to invest billions in companies of national economic security, specifically listing quantum as a potential sub-area.

Quantum increasingly viewed as critical technology

This is clearly good news for investors because quantum computing is being viewed as critical for the country in a similar way that rare-earth materials are. Not only could this lead to more investment for the sector, but having the government as a shareholder makes investors feel more protected because it isn't going to want its investment to fail.

While this is certainly good news, investors should be cautious with D-Wave because commercialization of quantum computing is still not a guarantee and the stock is already up over 2,650% in the past year. I'd still keep positions smaller and more speculative for now.

JPMorgan Chase is an advertising partner of Motley Fool Money. Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends JPMorgan Chase. The Motley Fool has a disclosure policy.