Telecom companies continue to expand their AI-powered services, fiber infrastructure, and 5G network capabilities. AT&T Inc (NYSE:T) alone plans to invest more than $250 billion to expand its network infrastructure across the US over the next 5 years. This builds on the $145 billion it spent on its networks between 2019 and 2023.
Expanding network capabilities is enabling carriers to address growing demand for their services. At the same time, it is making managing operations increasingly complex. Telecom operators face challenges in areas like managing outages, traffic flows, and technician routing. With conventional computing systems struggling to solve these problems efficiently, carriers are finding that quantum computing holds the promise.
Quantum computing provider D-Wave Quantum Inc. (NYSE:QBTS) is gaining attention after AT&T agreed to expand its use of the company’s technology.
D-Wave Expands Its Relationship With AT&T
AT&T Inc (NYSE:T) has struck a deal to expand its use of D-Wave’s quantum computing technology across its network operations. This follows early testing that produced encouraging results. Using D-Wave’s quantum computing technology, AT&T was able to cut the processing time for an optimization workload to less than 15 seconds from one hour.
The telecom giant now plans to deploy D-Wave’s technology for additional workloads, including outage detection, technician routing, and traffic management. This marks a move from proof-of-concept testing to a broad operational deployment.
For D-Wave, the expanded AT&T deal provides an important validation for its quantum computing platform. This platform is designed to solve complex optimization problems across industries.
How D-Wave Compares With IonQ
D-Wave and IonQ, Inc. (NYSE:IONQ) operate in the quantum computing industry, but they are pursuing different commercialization strategies.
D-Wave primarily targets optimization problems such as routing, scheduling, and resource allocation. IonQ pursues general-purpose, gate-based computing aimed at a broad range of applications.
Financially, both quantum computing companies maintain strong liquidity, allowing them to support continued investment in research and commercialization efforts. D-Wave ended the second quarter with approximately $546.2 million in cash and marketable securities. IonQ ended the first quarter with approximately $3.1 billion in cash, cash equivalents and investments, giving IonQ the substantially larger liquidity position.
How Hedge Funds Are Positioning Around D-Wave
During Q1, hedge fund ownership in D-Wave increased to 26 funds from 22 in the previous quarter.
Some of D-Wave’s largest elite investors increased their holdings materially in the quantum computing stock. Among them, Citadel Investment Group boosted its stake by 48% to $11.2 million, Tudor Investment Corp raised its position by 84% to $8.3 million, and Walleye Capital increased its stake by 10,273% to $7.6 million.
IonQ, Inc. (NYSE:IONQ) also attracted more hedge funds in that period, with ownership climbing to 39 funds from 28.
Regarding bearish bets, both quantum computing stocks have sizable short interest. This indicates lingering investor skepticism about the outlook of the quantum computing sector. D-Wave’s short interest stood at 17.82% on July 15, representing 65.1 million shares with 3.7 days to cover. IonQ’s short interest was 12.67%, equivalent to 47 million shares with 2.8 days to cover.
Is D-Wave’s AT&T Expansion Strengthening the Investment Case?
D-Wave’s expanded agreement with AT&T Inc (NYSE:T) is a strong indication that quantum computing is advancing from the labs into real-world enterprise deployments. The sharp reduction in AT&T’s workload processing time and the carrier’s planned broad deployment strengthen D-Wave’s commercial credibility.
Intense industry competition and uneven commercial landscape remain areas of concern. However, D-Wave enjoys many strengths, including growing enterprise relationships, improving hedge fund interest, and a strong liquidity position. These indicate that a company is making meaningful progress toward commercializing quantum computing technology.
While we acknowledge the risk and potential of T as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than T and that has 10,000% upside potential, check out our report about this cheapest AI stock.
READ NEXT: Should You Buy Lockheed Martin After Its Strong Q2 Earnings Rally? and AI-Fueled Demand Signals a Bigger Opportunity for Bloom Energy (BE) Investors.
Disclosure: None. Follow Insider Monkey on Google News.
