D-Wave Quantum: Valuation Concerns Overshadow Growth Potential

The Valuation Problem That Can’t Be Ignored

D-Wave Quantum (NYSE: QBTS) presents a paradox for investors. Since its SPAC merger debut in August 2022 at $10 per share, followed by a near-delisting below $1 in 2023, the stock now hovers around $12. Yet beneath this recovery lies a fundamental challenge: with an enterprise value of $9.9 billion against projected 2027 revenues of just $75 million, D-Wave trades at 132 times forward sales. This valuation is difficult to justify, especially when compared to IonQ, which expects to generate $312 million in revenue by 2027 but trades at only 55 times that estimate. Even if D-Wave’s stock were cut in half, it would still appear expensive relative to quantum computing peers.

Understanding D-Wave’s Technological Approach

What differentiates D-Wave from its competitors lies in its specific quantum architecture. While IBM drives electrons through superconducting loops in a single direction and IonQ uses precisely-calibrated lasers to trap ions in quantum states, D-Wave employs superconducting flux qubits—loops of superconducting metal that allow electric currents to flow simultaneously in both directions through what resembles an electric flux symbol pattern. This bidirectional approach achieves quantum states efficiently, though like IBM’s systems, D-Wave’s technology requires cryogenic refrigeration for operation.

D-Wave’s practical advantage emerges in its application strategy. The company designs its own quantum processing units (QPUs) and delivers quantum computing power via its cloud-based Leap platform, primarily focusing on quantum annealing—a technique that optimizes complex workflows by identifying the most power-efficient solutions. This approach resonates more strongly with mainstream business adoption than pure quantum computing research.

Customer Momentum Without Revenue Traction

D-Wave has assembled an impressive roster exceeding 100 customers, including Deloitte, Mastercard, Volkswagen, Lockheed Martin, and Accenture. However, this customer base masks a critical weakness: most clients participate in low-revenue pilot and research programs rather than deploying quantum annealing technologies at operational scale. Consequently, D-Wave generates most revenue from infrequent, unpredictable sales of its Advantage quantum systems, resulting in stagnant revenue growth throughout 2024.

Revenue and Profitability Trajectory:

The Catalyst: Advantage2 and 2025 Inflection Point

A potential inflection arrives with the Advantage2 quantum system, designed to solve 3D lattice problems 25,000 times faster than its predecessor while consuming less power. Revenue is projected to nearly triple to $25.4 million in 2025. However, losses will accelerate as D-Wave invests heavily in manufacturing and deployment of new systems priced at $20-$40 million each.

By 2027, analysts anticipate revenue reaching $75 million while adjusted EBITDA stabilizes at negative $64 million and net losses contract to $115 million. This growth trajectory relies on Leap platform expansion, pilot program conversion into higher-value partnerships, and increased enterprise adoption.

Market Growth Backdrop

The broader quantum market provides tailwinds. Dataintulo forecasts the quantum annealing market will expand at 15.7% CAGR from 2023 to 2032. Grand View Research predicts the quantum computing market itself will grow 20.5% annually from 2025 to 2030 as mainstream enterprises accelerate adoption.

Investment Verdict: Wait, Don’t Buy Yet

D-Wave’s long-term growth story is compelling, and the quantum computing industry’s expansion could drive significant value creation over the next decade. Yet the stock’s current valuation leaves insufficient margin of safety. At 132 times 2027 projected sales, D-Wave would need execution excellence to justify present prices. More attractive entry points likely exist, making patience the prudent strategy for now.