Quantum computing is being hailed as the catalyst that will usher in a new era of growth for the technology sector. With its potential to drive dramatic advancements for artificial intelligence (AI) and revolutionize cryptography, the tech has a subset of investors extremely excited.
While the progression of quantum computing technologies remains highly speculative, there are players in the category that stand out against the rest. Read on to see why D-Wave Quantum (QBTS +14.55%) could end up being one of the top investment plays in the category.
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D-Wave stock is risky but comes with huge upside potential
D-Wave Quantum is being touted as one of the most promising pure plays in the quantum computing space. On the flip side, investors should understand that investing in companies only focused on quantum computing comes with an elevated level of risk. D-Wave's technological progression could fall short of expectations, leading to shares underperforming even if the evolution of its tech stock winds up exceeding current forecasts.
In the third quarter, D-Wave's top-line revenue came in at $3.7 million -- up from $1.9 million in the prior-year period. Meanwhile, the business's bottom-line loss came in at $140 million -- up $117.3 million from its loss in the prior-year period. Rapidly accelerating losses amid big sales growth aren't necessarily a big red flag for a company at the forefront of an emerging tech category, but it does highlight the risk-reward dynamics inherent to the stock.
NYSE: QBTS
Key Data Points
D-Wave looks like a top pure-play pick for investors with high risk tolerance
With a market cap of about $8.8 billion, D-Wave is valued at approximately 309 times this year's expected sales. Even with the expectation of future tech breakthroughs baked into the company's valuation, the quantum specialist is likely years away from shifting into profitability.
In addition to small pure-play companies in the space, D-Wave faces competition from tech giants including Alphabet, Microsoft, and Nvidia. If resource-rich tech giants wind up delivering advancements that outperform D-Wave's tech, the company's stock could underperform even with major advancements for its quantum tech stack.
No doubt about it, D-Wave is a high-risk investment play. On the other hand, the company's high-risk profile also comes with the potential for explosive upside. If D-Wave delivers pioneering breakthroughs in the quantum computing space, the company's stock could wind up delivering incredible returns for investors who buy shares at today's price. The stock is probably only a good portfolio fit for investors with high risk tolerances, but it could turn into a millionaire maker if D-Wave continues leading the quantum tech space.
