At its high of the morning, QuantumScape (NASDAQ: QS) stock had soared as much as 32%. That came after the company provided its first-quarter update. Shares couldn't hold that gain, however, and were just 4.7% higher as of 11:23 a.m. ET.

That raises questions about why it rocketed higher in the first place and why some investors sold on that price spike. There are good reasons for both.

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QuantumScape's quarterly loss was not a surprise. The development stage company still doesn't have any meaningful sales. But the company did provide investors with a bit of a surprise in its quarterly report.

QuantumScape began operations at its Eagle production line in Q1 and is setting it up to operate efficiently. The second quarter should see ramped-up production to provide customers with sample cells for its solid-state batteries. What had investors pouring into the stock , though, was one simple statement in the shareholder letter.

The line that investors hung on was, "We are ramping up our engagements in new markets." QuantumScape went on to say that even as it is shipping cells to automotive partners for testing, it is engaging with others "to address the evolving energy-storage needs of AI data centers."

Investors hadn't considered that QuantumScape could also potentially address the growing energy needs of the massive data center build-out. The company also noted interest in its technology from participants in the military, government, and aerospace sectors.

Investors were getting a bit ahead of themselves, though. QuantumScape still needs to prove it can produce its battery cells at scale and that customers will accept that higher energy density improves the performance of their products. That will start with electric vehicles (EVs), and investors backed off on the stock today, realizing that QuantumScape isn't quite there yet.

Should you buy stock in QuantumScape right now?

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