D-Wave's 22% Surge: What's Behind the December Rally?

D-Wave Quantum Inc. (NYSE: QBTS) asurged more than 22% in early December, adding almost $5 per share in a single week. The move follows a tumultuous year that saw the stock rise tenfold before giving up more than half of those gains during the fall.

This price action underscores D-Wave’s unique positioning in the quantum computing sector: investors are cooling on the quantum field overall, but the hype surrounding these companies is still strong enough for news developments to trigger rallies. The question for investors, though, is whether mini-rallies like the current one are enough to sustain long-term gains.

Government-Focused Business Unit Announcement Coincides With Recent Spike

The latest jump in share price for D-Wave coincided with its early-December announcement of the formation of a business unit aimed at boosting U.S. government adoption of its technologies.

While quantum firms have so far failed to draw the interest of many business customers, they have had much greater success with major organizations and governments.

In its announcement, D-Wave specifically pointed to potential defense applications of its technology, highlighting its Advantage2 quantum system at Davidson Technologies' headquarters in Alabama.

Yet crucially, this announcement contained no confirmed new contracts—only strategic repositioning.

Still, investor enthusiasm was clear. The idea that this new unit might convert into government deals—especially given the Trump administration’s stated interest in expanding federal quantum infrastructure—was enough to spark a significant price move.

Gate-Model Project Is Costly, Uncertain

D-Wave’s long-term strategy includes expanding beyond its proprietary quantum annealing technology to offer gate-model quantum computing, the standard pursued by many rivals. This dual-approach could give D-Wave an edge with governments and large enterprises looking for more flexible platforms.

However, R&D costs associated with this expansion are likely to remain significant, despite a growing number of large system deals. Even with sizable top-line growth in recent quarters and fall warrant redemptions to bulk up its already-strong cash reserves, the company still has a long runway before its model will likely yield broader public adoption, let alone a consistent profit.

Could the Spike Continue, or Is This a Fluke?

Investors will be wondering if D-Wave's recent upward trend is likely to continue. On one hand, the market appears to be tiring of the quantum industry as a whole, with many specialized firms in the space experiencing shocking declines in the last several weeks. Many companies in the quantum space are still linked in terms of performance—other participants also saw a bump in the first week of December alongside D-Wave—and are not yet fully differentiated from one another.

On the other hand, though, D-Wave's recent rally—in spite of the company not announcing any fundamental changes to its order log or list of contracts—shows that even while investors cool on this trendy name, the enthusiasm can return in a flash. Investors may not automatically head to buy D-Wave shares on name alone at this point, but even the hint of a shift in a favorable direction (in this case, toward catering to a receptive U.S. government) can yield a short-term spike.

Traders comfortable with this level of volatility on an investment that remains fairly speculative for the time being might find opportunities to win nice returns in D-Wave's ups and downs. And if D-Wave is too turbulent, consider an investment in the broader quantum space through an exchange-traded fund (ETF) for some added diversification.

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The article "D-Wave's 22% Surge: What's Behind the December Rally?" first appeared on MarketBeat.