The technology sector is a favorite of growth-hungry investors, and it isn't difficult to see why. When tech companies develop innovative solutions to difficult problems, it can allow them to disrupt established industries and pioneer entirely new ones. The returns can be huge.
For example, if you had bought $5,000 worth of D-Wave Quantum (QBTS +6.53%) stock two years ago, you would have a position worth over $64,000 today -- a return of 1,190%. But that would have required some good timing. Investors who bet on the company around the time it debuted on the market in 2022 via a reverse merger with a special purpose acquisition company (SPAC) would be up just 25%. D-Wave spent a couple of years after that in doldrums, down at one point by more than 95% from its early peak. And those who bought at almost any time during the past year are in the red as well. The stock is down by about 69% over the past 12 months. But for investors today, the question is where D-Wave could be going. Let's dig deeper into the pros and cons of the company to decide what the future might have in store.
QBTS D-Wave Quantum
NASDAQ · As of 4:00 PM ET 10/15/26
Why quantum computing?
Quantum computing is a cutting-edge evolution of computer technology that is built around a completely different model from the computers and digital devices you use every day. Where those familiar machines store and process data in bits (either 1s or 0s), quantum machines process data in quantum bits, also known as "qubits." That allows them to perform computations in an entirely different way -- one that will (eventually) let them rapidly solve problems that would take today's most powerful supercomputers years or even millennia. If the technology can be developed to the point where it works reliably and at commercial scale, it promises to revolutionize industries ranging from drug discovery to AI.
To be fair, this is something that has been touted as being "just around the corner" for decades. But recent progress by industry leaders like Alphabet and IBM has helped raise investor optimism about the timeline for quantum computing to reach commercial viability.
Both companies believe they can have workable, fault-tolerant machines by the end of the decade. Wall Street is also getting optimistic, with analysts at investment banking firm Jefferies projecting that quantum computing industry revenue could rise from around $1 billion this year to $198 billion by 2040. Early leaders like D-Wave Quantum offer investors a way to get in on the ground floor.
What is D-Wave's edge?
D-Wave stands out from others working in this space because of its focus on developing quantum annealing machines, a niche subset of quantum computing technology that works by finding the lowest-energy solutions to problems. This is distinct from the gate-based quantum computers that most industry leaders are working on. Those are intended as more general-purpose devices.
Quantum annealing computers, by contrast, are only suitable for solving optimization and sampling problems. But while that's a narrower set of use cases, it includes a large set of tasks that are among the first that companies want to use quantum computing to solve. For example, in logistics, a quantum annealing machine could determine the most efficient routes for delivery drivers with dozens of locations to visit.
The company seems to believe its strategy offers a faster path to commercial viability. A test conducted by British pharmaceutical giant GSK (which has tested quantum devices for drug discovery and cybersecurity) suggests D-Wave's annealing devices may already be useful in certain niche real-world scenarios. However, D-Wave's second-quarter report shows that it has a long way to go before shareholders can rest easy.
Image source: Getty Images.
The good news was that the company's first-half bookings jumped 1,120% year over year to $35.5 million. (Bookings refers to orders that will generate sales in the future). However, Q2 revenue remained practically flat at $3.1 million.
There are also bottlenecks slowing the pace at which the company can fulfill the obligations associated with its orders. These issues raise questions about the scalability of its business model, even if demand for its machines continues to grow.
Meanwhile, D-Wave's bottom line looks grim. In the quarter, its operating losses doubled year over year to $53.3 million, and that trend looks likely to continue because of the significant outlays needed to pioneer a cutting-edge technology and keep up with much larger rivals like Google and IBM, which have significantly more resources.
Is D-Wave Quantum still a millionaire-maker?
After jumping by more than 10-fold in two years, it is fair to say that D-Wave Quantum has already been a millionaire-maker stock for many investors who bought it when the market was more pessimistic about its prospects. The company's focus on a potentially transformational technology means it is capable of continuing to trounce the wider market if things go as expected.
That said, much of the rally that drove it upward over the past couple of years was driven by hype and optimism instead of tangible operational results. Earnings still leave much to be desired, and with a price-to-sales (P/S) multiple of 362, the stock is already priced for perfection, and with an enormous amount of hoped-for growth baked in. While D-Wave is exciting, serious investors may want to wait on the sidelines for a lower entry point.
