One of the hottest stocks on the last month is D-Wave Quantum Inc, under the ticker NYSE: QBTS. The stock belongs to the quantum computing sector which some of the analyst consider it as the next big thing after AI which would explain the rush from investors to get those stocks. Today, let’s go through a bit of a analysis to see if D-Wave Quantum Inc is a buy or a sell.
D-Wave Quantum Inc. is a pioneering company in the quantum computing industry, specialising in the development and delivery of quantum computing systems, software, and services. Founded in 1999 and headquartered in Burnaby, British Columbia, Canada, D-Wave has been at the forefront of advancing quantum technology, particularly through its focus on quantum annealing—a method designed to solve complex optimization problems more efficiently than classical computing approaches.
Business Model and Offerings
D-Wave’s primary business revolves around providing quantum computing solutions to enterprises and researchers, which could say it is more a niche than the wide public compared to the boom in AI. Their flagship product, the Advantage™ quantum computer, is accessible via the cloud through their Leap™ quantum cloud service. This platform enables users to develop and run quantum applications for various purposes, including optimization, machine learning, and material sciences. By offering both hardware and software solutions, D-Wave aims to make quantum computing more accessible and practical for real-world applications.
Financial Performance
Reviewing the most recent financial performance based on yesterday’s information (December 23, 2024), D-Wave Quantum’s market capitalization stands at approximately $1.83 billion, marking a significant increase of over 1,000% compared to the previous year. This substantial growth reflects quite a heavy investor interest and confidence in the company’s potential within the quantum computing sector.
In terms of revenue, D-Wave reported ‘only’ $9.42 million over the trailing twelve months, representing a 14.27% year-over-year increase. Quite low compared to the nearly 2 billions market cap, so investors see a fantastic future on this company or they are too greedy at this stage and are speculative with the stock (likely both of them cases).
This upward trend indicates a growing adoption of their quantum solutions, although the company continues to operate at a net loss, which is typical for firms in the early stages of commercializing advanced technologies.
Recent Strategic Partnerships and Collaborations
So, how is D-Wave Quantum growing, what are they selling and which are they recent deal? Well, D-Wave Quantum Inc. has actively pursued strategic partnerships to expand the adoption of its quantum computing technologies across various industries, but I wanted to highlight the most notable collaborations that I found on the web:
- Staque Partnership: In September 2024, D-Wave announced a strategic partnership with Staque, a consulting and development firm specialising in AI, blockchain, and quantum computing. This collaboration aims to accelerate the adoption of annealing quantum computing across the Middle East, focusing on developing and deploying quantum and hybrid applications for enterprise optimization and AI challenges. The partnership was unveiled at Qubits UAE in Dubai, highlighting the region’s commitment to diversifying its economy through advanced technologies.
- Zapata AI Collaboration: In July 2024, D-Wave expanded its partnership with Zapata AI, a leader in industrial generative AI software solutions. The enhanced collaboration is designed to accelerate the development and delivery of integrated quantum and generative AI solutions via D-Wave’s Leap™ cloud platform. By leveraging Zapata’s proprietary Universal Generative AI software, the partnership aims to improve model training efficiency and performance, combining generative AI with quantum optimization to address complex business problems.
- Chicago Quantum Exchange Membership: In September 2024, D-Wave joined the Chicago Quantum Exchange (CQE) as a corporate partner. This membership aligns with D-Wave’s mission to advance quantum science and train the future quantum workforce. Through this collaboration, D-Wave aims to foster industry adoption of quantum technologies and contribute to the growing quantum ecosystem in the Midwest.
- JT Pharma Collaboration: In October 2024, D-Wave partnered with JT Pharma to explore quantum-enhanced drug discovery. This collaboration focuses on utilizing D-Wave’s quantum computing capabilities to accelerate the identification and development of new pharmaceutical compounds, demonstrating the potential of quantum technology in the life sciences sector.
- Mastercard Collaboration: In July 2022, D-Wave and Mastercard announced a partnership to explore the application of quantum computing in financial services. The collaboration focuses on research and development of quantum-hybrid applications in areas such as consumer loyalty and rewards, aiming to enhance the efficiency and effectiveness of financial transactions and services.
We can see just on these deals the D-Wave’s commitment to advancing quantum computing applications across diverse industries and regions, accelerating the commercialization of quantum technologies and most importantly, dealing with big clients such as Mastercard.
Analyst Perspectives and Stock Performance
D-Wave Quantum has gained attention from several analysts recently thanks to their bull run on the last two months. Those have provided insights into the company’s stock performance and future prospects too, however on this article we are just going to review the actual price target for D-Wave Quantum, instead of going individually through the analyst’s thoughts. The consensus price target for D-Wave Quantum among six analysts is a “Buy” rating, with an average 12-month price target of $5.63. Price targets range from a low of $2.25 to a high of $9.00, suggesting that even themselves have varying degrees of optimism about the company’s future performance. Just as a reminder, as yesterday close, the stock was at $8.15.
Notably, just recently Benchmark raised its price target for D-Wave Quantum from $3 to $8, maintaining a “Buy” rating. The adjustment comes after the Benchmark analyst’s meeting with D-Wave’s CFO, John Markovich, at the Benchmark’s Discovery (NASDAQ:WBD) Conference and in my opinion this adjustment reflects increased confidence in the company’s sales pipeline and the overall outlook for quantum computing.
D-Wave Market Position and Future Outlook
D-Wave Quantum’s focus on quantum annealing sets it apart from competitors that concentrate on gate-based quantum computing. This specialisation allows D-Wave to target specific applications, particularly in optimization problems prevalent in industries such as logistics, finance, and manufacturing.
The quantum computing market is still in its early stages, with practical, large-scale applications expected to materialise in the coming years. D-Wave’s ongoing advancements and strategic partnerships position it favourably to capitalise on the anticipated growth in this sector. However, the company faces competition from established technology giants like IBM and Alphabet Inc., which are also investing heavily in quantum computing research and development. There is also competition with other smaller companies that we have also did stock analysis for Rigetti Computing, Quantum Computing Inc and IonQ.
About D-Wave Quantum Inc (NYSE: QBTS) future outlook, their next earning report will give us a better picture of how the company is performing and what are their estimates for following quarters / year. Currently D-Wave Quantum’s next earning report is scheduled to release on March 27, 2025.
The earnings estimates for D-Wave Quantum are earnings per share (EPS) of approximately -$0.09 for this upcoming report, indicating a year-over-year improvement of about 10%. In the previous quarter, which was reported on November 14, 2024, D-Wave posted an EPS of -$0.11, slightly below the consensus estimate of -$0.10, resulting in a negative earnings surprise of 10%, although that didn’t stop the meteoric rise of the stock value last time.
Investment Considerations
From our point of view, investing in D-Wave Quantum presents both big opportunities and big risks that are not for the appetite of every investor. The company’s innovative technology and early entry into the quantum computing market offer significant growth potential. However, the sector’s speculative nature, coupled with the company’s current lack of profitability, suggests that potential investors should approach with caution.
Taking average analysts’ price targets, that indicates a potential downside from the current stock price, reflecting the uncertainties in emerging technologies while the most recent price target from Benchmark gives some confidence in the change. As we always advise, investors should conduct their own research, considering both the promising advancements in quantum computing and the challenges associated with bringing such technologies to market, to decide about their own investments.
Final thoughts
We believe that D-Wave Quantum Inc. stands as a key player in the evolving quantum computing landscape, with its unique focus on quantum annealing and a growing portfolio of solutions aimed at real-world applications. The company’s recent financial performance and stock appreciation highlight its potential on the early stages of quantum computing industry what some analyst call it the next big thing after AI. However, the stock necessitate careful consideration for investors and is key to stay informed about industry developments and closely monitoring D-Wave’s progress . That will be essential for making informed investment decisions in this dynamic sector.
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