Key insights
- D-Wave Quantum's stock has surged, driven by interest in its quantum annealing services. However, revenue generation remains a challenge due to reliance on low-revenue pilot programs and infrequent system sales. The company's future hinges on converting pilot programs into large-scale deployments, but current revenue models suggest limited near-term impact on broader US equity markets.
Three years ago, D-Wave Quantum's (QBTS 8.04%) stock closed at its all-time low of $0.41 per share. At the time, investors were disappointed by the company's lackluster sales growth, steep losses, and sky-high valuation. But as of this writing, it trades at about $20.
That 4,550% rally would have turned a $10,000 investment into more than $465,000. Let's see why this quantum stock skyrocketed -- and why it might just be the next big thing.
Quantum computers can complete certain tasks much faster than classical computers, but they're larger, pricier, consume more power, and make more mistakes. To address those challenges, quantum computing companies are developing newer systems and services.
D-Wave designs its own quantum processing units (QPUs) and Advantage quantum systems, and it provides remote access to those systems through its cloud-based Leap platform. Unlike many of its industry peers -- which provide a broader range of general-purpose quantum computing services -- D-Wave mainly provides quantum annealing services.
Quantum annealing services run specific processes -- such as workflows, supply chains, and logistics -- through a quantum system and measure the power they consume. They identify the least-power-consuming devices as the most efficient, making them useful tools for mainstream companies rather than niche research institutions. More than 100 companies -- including Deloitte, Mastercard, Volkswagen, Lockheed Martin, and Accenture -- have already been testing out its services.
However, D-Wave doesn't generate much recurring revenue from those big-name customers, since most are enrolled in its low-revenue pilot and research programs on its Leap platform. They're not deploying D-Wave's services at scale to overhaul their entire businesses. D-Wave generates much more revenue from selling its Advantage systems, which cost more than $20 million, but those sales are infrequent, unpredictable, and subject to lengthy upgrade cycles.
That's why D-Wave's revenue growth from 2022 through 2024 stayed sluggish. Its adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also stayed in the red as its net losses widened. Yet even after its stock sank to its all-time low in 2023, it was still valued at $52.5 million -- or six times the revenue it would generate that year.
Metric
2022
2023
2024
2025
Revenue
$7.2 million
$8.8 million
$8.8 million
$24.6 million
Adjusted EBITDA
($48.0 million)
($54.3 million)
($56.0 million)
($71.8 million)
Net Income
($51.5 million)
($82.7 million)
($143.9 million)
($355.1 million)
But in 2025, D-Wave's revenue surged 179% as it started selling its new Advantage2 quantum systems, which can solve certain problems 25,000 times faster than its first-generation systems while consuming less power.
In its latest conference call, CEO Alan Baratz said D-Wave would deliver "at least" two systems in 2026 and aim to deliver two to three systems annually over the next few years. It also expects to keep expanding its enterprise subscription tier, which costs about $25,000 per quarter.
Assuming all of those catalysts kick in, analysts expect D-Wave's revenue to grow at an 80% CAGR from $24.6 million in 2025 to $142.4 million in 2028. But with a market cap of $8.2 billion, D-Wave's stock isn't cheap at 57 times its 2028 sales. Analysts also expect its adjusted EBITDA to stay negative for the foreseeable future.
D-Wave's stock is speculative, but it could have significant upside if more companies adopt its quantum annealing services to streamline operations. It could also expand its business beyond quantum annealing services through additional acquisitions and secure more recurring revenue through stickier government contracts. Therefore, it could eventually expand and evolve into a much larger quantum computing company -- and investors who nibble on it today could reap some big gains over the next decade.