D-Wave Quantum (NYSE:QBTS) has become one of the most explosive names in the quantum computing space – and the numbers speak for themselves; shares have skyrocketed a staggering 1,225% over the past year.
Much of this momentum is driven by excitement over quantum computing’s long-term promise – the potential to solve problems that are virtually impossible for classical systems. However, skeptics argue that realizing this vision could take years, as truly general-purpose quantum computers remain largely theoretical.
D-Wave, however, has taken a different approach – one that may explain why investors are paying such close attention. Rather than waiting for full-fledged universal quantum systems to mature, the company has focused on quantum annealing, a specialized subset of the field. And it claims to have already reached a critical breakthrough: what it calls “practical quantum supremacy.” Using its 1,200-qubit Advantage2 annealing quantum computer, D-Wave says it successfully solved a real-world materials simulation problem – modeling a complex magnetic spin system – in mere minutes. According to the company, this is a task that would take even the world’s fastest supercomputers millions of years and more energy than the planet produces in a year.
As such, being the only company to have shown “quantum supremacy on a meaningful problem,” top investor Yiannis Zourmpanos thinks the company is now “distinguished from competitors like IonQ and Rigetti, whose gate-based quantum systems remain years away from delivering comparable commercial applications and value.”
The technical capabilities of D-Wave’s Advantage2 system further strengthen its “competitive edge.” With over 4,400 qubits and improved 20-way connectivity, it offers faster, higher-quality solutions thanks to doubled coherence time and a 40% energy scale boost. These upgrades enable it to tackle more complex problems, as seen in Ford Otosan’s use of the system which resulted in a sixfold reduction in scheduling time. Features like Fast Anneal and error mitigation further enhance performance, making Advantage2 well-suited for optimization in sectors like pharma, logistics, and manufacturing.
Meanwhile, the company reported Q1 FY25 revenue of $15 million, a 509% year-over-year jump, driven primarily by a $12.6 million Advantage system sale to the Julich Supercomputing Center. While that is an impressive gain, Zourmpanos does note a weakness in its revenue model: lumpy income and long sales cycles, especially from system sales to government and research institutions.
Yet, this weakness is driving the company to diversify its revenue streams and strengthen its “go-to-market strategy.” D-Wave is expanding its revenue base through the Leap Quantum Launchpad program, which provides a three-month trial of quantum computing access and expert support. Early conversions from these trials to paid engagements highlight the potential for growing recurring revenue from its quantum computing-as-a-service (QCaaS) model. Additionally, D-Wave’s push into blockchain and AI applications – using quantum computing to enhance blockchain security and cut energy consumption by as much as 1,000x – could create new, recurring revenue streams.
“Despite lumpy sales and lofty valuation, its edge in annealing tech, rising QCaaS revenue, and growing client base point to long-term upside,” the 5-star investor summed up.
Accordingly, Zourmpanos, who is among the top 1% of TipRanks’ stock pros, rates QBTS shares a Buy. (To watch Zourmpanos’s track record, click here)
The Street’s analysts unanimously agree with that take. Based on Buys only – 6, in total – the stock claims a Strong Buy consensus rating. Going by the $16.80 average target, a year from now, shares will be changing hands for a 12% premium. (See QBTS stock forecast)
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