D-Wave Quantum (QBTS +4.70%), one of several companies exploring the commercialization of quantum computing, reported its first-quarter earnings results this morning, May 12.
The company's net loss of nearly $18.5 million came in smaller than expected, while revenue of nearly $2.9 million missed Wall Street consensus estimates.
Quantum computing stocks like D-Wave have absolutely exploded since late 2024. While D-Wave's stock is down nearly 23% this year, including a nearly 10% loss today, as of 12:05 p.m. ET, it's up over 20-fold since October 2024.
Image source: The Motley Fool.
Traditional computers are built on the foundation of bits, the smallest unit of digital information. Quantum computers are built with qubits, which have parallel-processing capabilities and can therefore process much more data and compute much more complex calculations.
Quantum computers are quite complex to build, but the market seems to think there is strong evidence that commercialization might be possible. Is D-Wave Quantum a buy following its recent earnings report?
Definite signs of progress
D-Wave is one of the only companies pursuing both annealing quantum computing and more traditional gate-based quantum computing. Quantum annealing can typically leverage more qubits, but it is best suited for optimization problems with multiple solutions.
Gate-based quantum computing is believed to solve a much wider set of problems, but the systems have been trickier to build and often have higher error rates than annealing systems.
In the quarter, D-Wave reported closed bookings of $33.4 million, an increase of nearly 2,000% year over year. The bookings included the sale of a $20 million quantum system to Florida Atlantic University, as well as a 2-year, $10 million quantum computing services agreement with a Fortune 100 company.
NYSE: QBTS
Key Data Points
D-Wave also acquired a company in the quarter called Quantum Circuits, which builds error-corrected superconducting gate-based systems. Furthermore, D-Wave laid out its product road map:
- Build a dual-rail system with roughly 175 qubits and create a design for a 1,000-qubit system by the end of 2028.
- Build a 1,000-qubit dual-rail system with 10 logical qubits and create a design for a 10,000-qubit system by 2030.
- Build a dual-rail qubit system that can support 100 logical qubits, which is considered a critical milestone for achieving initial quantum utility, by 2032.
Quantum stocks are quite volatile, so it's hard to say exactly what's driving D-Wave Quantum lower today. On a year-over-year basis, revenue is way down because sales of quantum systems are lumpy. On the other hand, bookings are up significantly year over year.
Ultimately, most quantum computing stocks are big gambles at this point. Yes, these companies are making progress on the tech and even generating some sales, but as D-Wave said, it still doesn't expect to reach initial quantum utility until 2032, and a lot can happen between now and then.
With an $8 billion market cap, D-Wave quantum trades at huge multiples. If you want to take a small, speculative position right now, I think that's fine, but I wouldn't advise anything more than that.
