D-Wave Quantum (QBTS 7.06%), a provider of quantum computing services, took its investors on a wild ride after it went public by merging with a special purpose acquisition company (SPAC) nearly three years ago. It started trading at $10 a share, sank as low as $0.41 in May 2023, but now trades at around $16.
D-Wave's stock bounced back as it launched a powerful new processor, the broader quantum computing market heated up again, and interest rates declined. But with a market cap of $5.3 billion, it trades at 140 times next year's projected sales of $38 million. It's also expected to stay unprofitable for the foreseeable future.
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The bulls believe D-Wave's early-mover advantage in the nascent quantum computing market justifies that premium valuation. Its quantum annealing tools help companies optimize their workflows, schedules, and supply chains. It runs those processes through its systems and identifies the ones that consume the least power as the most efficient ones. It also designs its own chips and hardware, and it provides cloud-based services on its Leap platform.
D-Wave already serves more than 100 customers, and its prospects look bright, but it hasn't proven that it can scale up its business yet. Analysts expect it to generate $74 million in revenue in 2027 -- but it already trades at 72 times that estimate. So instead of chasing D-Wave's stock at these frothy levels, it could be smarter to invest in two less popular -- but still speculative -- stocks that might grow at a faster rate and eclipse its market cap within the next two years.
1. QuantumScape
QuantumScape (QS 8.51%) develops solid-state lithium metal batteries, which have higher charging speeds, higher capacities, and better thermal resistance than lithium-ion batteries. Solid-state batteries are more expensive and difficult to manufacture than lithium-ion batteries, but QuantumScape plans to commercialize them for electric vehicles (EVs).
QuantumScape's first QSE-5 battery has an energy density of over 800 Wh/L (watt hours per liter) and can be fast-charged from 10% to 80% in less than 15 minutes. The lithium-ion batteries used in most EVs today have an average density of 300 to 700 Wh/L with an average fast-charging time of 20 minutes to an hour.
QuantumScape hasn't generated any meaningful revenue yet, but it's backed by Volkswagen, it's already started to ship its first samples to automakers, and it expects to start commercializing its first battery designs in late 2026. Instead of manufacturing the batteries on its own, it plans to license the designs to other battery makers and automakers to generate high-margin revenue from royalties and licensing fees.
If it pulls that off, analysts expect QuantumScape's revenue to jump from $5 million in 2026 to $60 million in 2027. With a market cap of $3.9 billion, it already trades at 65 times that estimate -- but its market could grow much bigger over the next decade. Assuming it matches analysts' expectations, doubles its revenue to $120 million in 2028, and trades at a slightly lower 50 times forward sales, its market cap could grow more than 50% to $6 billion within the next two years. Therefore, if QuantumScape successfully commercializes its first batteries as D-Wave struggles to justify its higher valuation, it might just generate bigger gains and surpass its market cap.
2. Plug Power
When Plug Power (PLUG -3.09%) went public in 1999, it planned to build hydrogen-powered residential systems. Those plans didn't work out, so it pivoted toward developing hydrogen fuel cells for warehouse forklifts and hydrogen storage solutions. That new business model attracted the attention of Amazon and Walmart, which became its top customers and biggest investors through their stock warrants.
Plug Power suffered a major slowdown in 2024 as it lapped two big acquisitions and struggled with the market's sluggish demand for its fuel cells and charging systems. But it remains the world's largest buyer of liquid hydrogen, and it's already deployed more than 70,000 fuel cell systems and over 250 fueling stations.
So if the hydrogen market finally warms up, its sales could soar. It has plenty of irons in the fire: It secured a $1.66 billion loan guarantee from the U.S. Department of Energy (DOE) in January to fund its construction of six green hydrogen manufacturing plants, the Senate's new spending bill grants a two-year extension for the hydrogen industry's tax credits, and its new joint venture with Olin could dilute its operating costs. It also aims to narrow its losses with a new cost-cutting initiative called Project Quantum Leap.
Assuming all those tailwinds kick in, analysts expect Plug to more than double its revenue from $629 million in 2024 to $1.4 billion in 2027. But with a market cap of $1.7 billion, it trades at less than 1 times this year's revenue. If it matches analysts' estimates, grows its revenue another 30% in 2028, and trades at a more generous 10 times forward sales, its valuation could swell more than tenfold to nearly $18 billion over the next two years.
