Will D-Wave's Federal Government Boost Last?

Key Points

• D-Wave Quantum shares went on a rollercoaster ride in mid-October, ending a week down about 17%.
• Sending shares plummeting was news that the firm would redeem all outstanding public warrants, a move likely to be dilutive for current shareholders.
• On the other hand, the stock recovered somewhat as investors expect the federal government to take an equity stake in several quantum companies, including D-Wave.

D-Wave Quantum Inc. NYSE: QBTS experienced an unusually volatile week in mid-October 2025, even relative to other turbulent periods in the quantum computing star's recent history. Shares plummeted from close to $40 to under $27 each before partially reversing course late in the week, leaving the firm with a five-day return of -17.6%. While there is an argument to be made that D-Wave is substantially overvalued, and a sudden and precipitous price correction could be a signal that investors may be able to buy in at a lower price point than usual, there is also reason for caution here.

First, D-Wave's initial sell-off this week was likely the result of an announcement from Oct. 20 that the company would redeem all of its outstanding public warrants. But following that, the boost later in the week coincided with a report from the Wall Street Journal suggesting that the Trump administration may be preparing to codify its support of the quantum industry by actually taking equity stakes in a group of companies that could potentially include D-Wave. In regard to what this means for D-Wave in particular, this could be a boon for investors. However, a closer inspection likely reveals that investors should be cautious about this news and that support from the federal government—though likely beneficial for D-Wave's performance—may be more complicated than it seems.

Federal Government Involvement in Quantum Remains Unclear

In a whirlwind news week concerning the federal government's possible involvement in the quantum industry, it appeared initially that D-Wave might be among a larger group of quantum stocks to benefit from the sale of an equity stake to the U.S. Commerce Department of at least $10 million. Though this amount is relatively small compared to what D-Wave's quarterly revenue aims to be, it would nonetheless mark a tangible investment from the federal government at a time when the industry continues to search for its footing. Unsurprisingly, investors sent share prices of several major quantum-focused firms rising immediately following the Wall Street Journal's report.

In keeping with fast-moving updates on tariffs and other financial matters, a Commerce Department official quickly pushed back on the reporting, suggesting that the department was not in talks with quantum computing industry firms to provide federal funding in exchange for equity positions. For investors, this murkiness was enough to stall D-Wave's climb late in the week, but it remains to be seen whether it will continue to impact share prices going forward. Some investors may find this pushback to be reassuring—after all, if the quantum industry becomes as large and influential as many anticipate, a company like D-Wave may be capable of massive growth even without federal support. And of course, federal funding may also bring with it complex and changing regulations or requirements that could threaten to slow innovation in a highly competitive, nascent industry.

D-Wave's Warrants May Be a Bigger Issue for Investors

D-Wave's announcement that it will redeem roughly 5 million warrants, with those warrants to cease trading effective November 17, may pose a more lasting concern for investors. The result of this action is likely going to be a dilution of current shareholder positions as the company may issue new shares. In the event all outstanding warrants are exercised, D-Wave expects to issue 7.2 million new shares of common stock, for a dilutive effect of around 2.1% for current shareholders.

With the prospect of their positions being diluted, investors may be increasingly cautious about D-Wave in the short term. The fact that D-Wave remains a largely speculative investment based on its lack of consistent profitability and ramping revenue may also concern some investors further. Nevertheless, D-Wave's significant growth potential—evidenced by 11 out of 13 analysts still rating QBTS shares as a Buy—suggests that many investors with holdings in this company are probably willing to keep their risk tolerance intact. This can be demonstrated by the fact that the firm has seen an 11% improvement in short interest relative to the prior month, a sign that investors as a group are remaining optimistic about D-Wave's chances despite the recent turbulence.