It hasn't been a good year so far for quantum computing stock D-Wave Quantum (QBTS 5.71%). Shares are down 18.8% since the beginning of the year.
NYSE: QBTS
Key Data Points
But since the beginning of 2025, it's quite a different story for D-Wave: The stock is up more than 150% since then.
The recent drop could represent a buying opportunity...or it could be a taste of bigger losses to come. Is D-Wave stock a buy now?
How D-Wave stands out from the pack
The quantum systems D-Wave offers are a bit different from those offered by rival quantum start-ups Rigetti Computing (RGTI 5.14%) or IonQ (IONQ 3.62%). Those companies -- along with most other quantum computer manufacturers -- focus on classic gate-model quantum computing. In a gate-model quantum system, a quantum particle is moved through a series of "gates" that manipulate its quantum state to perform calculations or process information.
Image source: Getty Images.
D-Wave's systems, on the other hand, perform quantum annealing. Rather than precisely manipulating a single particle, quantum annealing analyzes the output from the entire system as a whole. This allows it to excel at different kinds of problems than a gate-model system. For example, quantum annealing is very good at finding optimal configurations of data points, like the optimal route for a delivery driver or the likeliest molecular structure for a pharmaceutical company to pursue for development.
Quantum annealing can't match the accuracy of gate-model quantum computing -- and neither has yet reached the accuracy of classical computing -- but for some problems, even finding a "near-optimal" solution via quantum annealing is going to be faster and less expensive than trying to get the optimal solution from a quantum or classic computer. Plus, there's less competition in this niche, which is likely a plus for D-Wave.
However, D-Wave just announced it has completed the acquisition of Quantum Circuits, a developer of gate-model quantum systems, which it says makes it the "world's first and only dual-platform quantum computing company" that can now "address the full range of customers' complex computational problems." This could either be a solid advantage for the company in the years ahead...or a big nothingburger. Only time will tell.
Image source: Getty Images.
The long road ahead
Speaking of time, the question is whether D-Wave stock is a buy now, not years from now.
Whether you're talking about quantum annealing or gate-model quantum computing, there isn't a commercial market for either yet. Right now, D-Wave's quantum annealers are almost exclusively used for research, and as you can imagine, the market isn't particularly large. D-Wave's trailing-12-month (TTM) revenue sits at just $24.1 million, which isn't surprising given that the industry is still in its infancy.
However, D-Wave's valuation is surprising. Eager investors have piled into D-Wave's stock in the hope that it will someday grow into a much larger company that can take a major slice of the quantum computing market when it matures. According to McKinsey and Company, the quantum computing market could be worth between $28 billion and $72 billion by 2035, up from $4 billion in 2024. But that's almost a decade away, and there's no guarantee the company will even be around when we reach that point.
Image source: Getty Images.
What about valuation?
Despite its unprofitability and lack of revenue, D-Wave already has a market cap of $7.4 billion. That's a higher valuation than Lyft, WingStop, or Mattel.
Small start-ups in cutting-edge technology fields almost always start out at laughably high valuations, so even though D-Wave's trailing price-to-sales ratio is a ridiculously high 256, that shouldn't concern investors who want to get an early start investing in quantum computing. What should concern investors is that the company's stock is likely to be subject to wild price swings and additional share dilution for years before it ever becomes clear whether it's commercially viable or not. And even so, at this early stage it's impossible to tell whether D-Wave is likely to be one of the big winners of quantum computing...or one of many also-rans.
D-Wave might be a buy now as part of a basket of quantum computing stocks, but investors should be aware that any money they put into this speculative investment at this stage is very much at risk. I wouldn't invest in D-Wave right now with money I couldn't afford to lose.
