Quantum-computing technologies have the potential to dramatically increase the efficiency of AI development.

It's been an eventful week for quantum stocks, as strategic government partnerships and new applications for the technology have fueled fresh investor interest.

Quantum stocks jumped again on Friday. Quantum Computing rose 20%; Quantum Corporation rose 15%; Rigetti Computing rose 5%; Arqit Quantum and Sealsq rose 4%; IONQ and D-Wave Quantum rose 3%.

The overall quantum-computing sector has crushed the broader market this year. The Defiance Quantum ETF (QTUM) has returned over 28% this year, exceeding the Philadelphia Semiconductor Index's SOX 26% return and besting the S&P 500's 14% return.

Recent developments in the sector included the U.S. Energy Department's announcement on Wednesday of a partnership with IonQ and Honeywell International Inc. (HON), aimed at the development and deployment of quantum technologies in space. According to a Thursday note from Benchmark analyst David Williams, the deal, combined with previous acquisitions, makes IonQ the only U.S. full-stack quantum-solutions provider. And while Honeywell has traditionally been regarded as an industrial-manufacturing company, it's been building out its quantum-computing business and has recently received funding from Nvidia Corp.'s (NVDA) venture-capital arm.

IonQ's stock rose about 5% on Wednesday, while D-Wave's stock gained roughly 19% to reach a record. D-Wave showcased its capabilities in drug discovery and logistics at a user conference in Tokyo, Williams highlighted. It has been one of the most successful quantum stocks this year, rallying nearly 180% in 2025.

Additionally, the 2025 Quantum World Congress is currently taking place this week, further boosting support for the industry.

Unlike traditional computers, which are binary, quantum computing uses the principles of quantum mechanics to process a vast number of possibilities simultaneously. The technology is gaining traction as artificial intelligence demands ever-increasing amounts of computing power. With energy being a bottleneck for AI development, more-efficient computing methods will become essential.

"The quantum play is one where you can get the same amount of computations with less energy output," Sean O'Hara, president at Pacer ETFs, told MarketWatch.

It's not just Nvidia hopping on the quantum trend: in August, International Business Machines Corp. (IBM) and Advanced Micro Devices Inc. (AMD) announced a partnership to collaborate on developing quantum technologies.

However, investors shouldn't expect the latest rally in quantum to pave the way for smooth sailing going forward, according to O'Hara. The technology has great potential, but it's still in its nascent stages. In January, quantum stocks fell sharply after Nvidia Chief Executive Jensen Huang commented that "very simple quantum computers" could be 20 years away.

As a result, long-term investors in quantum should buckle up for "a pretty volatile ride," O'Hara said.