By Mackenzie Tatananni

D-Wave Quantum is proving adept at winning over Washington just as the company embarks on a high-stakes architectural pivot.

D-Wave announced Tuesday that it had secured a $1.6 million National Science Foundation grant. The funding comes through the agency's National Quantum Virtual Laboratory program, which unites researchers, industry, and government to develop and commercialize quantum technology.

The announcement marks a significant step up in D-Wave's yearslong relationship with the NSF. The capital infusion will support D-Wave's role in a federal project centered on developing foundational technologies for fault-tolerant quantum computing.

More than a year ago, the project — Erasure Qubits and Dynamic Circuits for Quantum Advantage, better known as ERASE — was one of six pilot initiatives to receive an NSF grant. Last week, the agency announced another $4 million to advance the project into its next stage.

As part of that push, the NSF selected five research teams to design experimental quantum technologies, including networking. This field is considered the next frontier in practical quantum technology and the precursor to a quantum internet, akin to the classical networks that allow computers to communicate today.

Crucially, more than 24 companies are joining on these initiatives to scale the resulting technologies. Among them are IonQ, Nvidia, and Honeywell-backed Quantinuum, which went public earlier this month.

The NSF grant is the latest affirmation of D-Wave's strong backing at the federal level. D-Wave was among a handful of companies selected for a Commerce Department initiative in May, which saw quantum developers trade equity stakes in their businesses for federal funding.

Just last week, President Donald Trump signed two executive orders fast-tracking quantum systems, mandating a research-ready quantum computer by 2028 and a government-wide migration to post-quantum cryptography by 2031.

The latest endorsement comes at a critical time, as D-Wave ramps up its quantum development efforts with a renewed focus on gate-model computing — a different modality than the signature quantum annealing that has allowed D-Wave to carve out a niche in the industry. With this pivot, D-Wave's systems will be able to tackle a wider range of problems, helping the company meaningfully expand its customer base.

As investors search for the next catalyst, fresh federal support could be exactly what delivers. Shares need a boost: After more than tripling in 2025, D-Wave has been a laggard this year, falling 8.3%. Peers have traded mixed: IonQ is up 19% so far, while Rigetti Computing has fallen 13%.

Out of its peer group, D-Wave was by far the biggest gainer last year, meaning the stock has limited room to run. While IonQ rose a modest 7.4% and Rigetti gained roughly 45%, D-Wave skyrocketed 211% in 2025. Investors can't read too much into last year's moves, which were largely driven by speculative enthusiasm ahead of broader commercialization of the technology.

However, 2026 has marked a shift. IonQ's outperformance comes as the market moves away from viewing quantum as a monolithic hype trade and begins to separate the winners from the losers. IonQ has delivered tangible revenue growth, satisfying investors who are waiting for a late-decade inflection point brought on by the advent of more powerful, reliable machines.

Although D-Wave's latest quarterly revenue fell 81%, a spike in bookings indicates the company is prioritizing long-term backlog over immediate sales. CEO Alan Baratz has repeatedly cautioned that revenue will appear "lumpy" over the short term due to the one-time nature of system sales.

However, these results are expected to even out in the future. At D-Wave's latest investor day, management noted that system sales were increasingly contributing to top-line growth, complementing steady quantum-computing-as-a-service revenue.

Ultimately, validation at the government level provides a vital tailwind as D-Wave broadens its focus. If the company wants to reignite its momentum, it must leverage this state backing to prove it can deliver the quantum power investors are paying a premium for.

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

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