D-Wave Quantum's Valuation Puzzle: Strong Fundamentals Meet Sky-High Expectations

The quantum computing narrative has captivated investors in 2025, and D-Wave Quantum QBTS stands at the center of this excitement. Year-to-date, the stock has surged 245.1%, vastly outpacing the S&P 500’s 18% gain and leaving peers like IonQ IONQ (up 30.2%) in the dust. Yet beneath the impressive price momentum lies a critical question: Is QBTS a compelling opportunity or a waiting game for better entry points?

The Financial Case Speaks Volumes

D-Wave’s third-quarter 2025 results reveal genuine operational progress. Revenues doubled year-over-year and grew 8% sequentially, handily beating analyst expectations by 19.8%. More impressive is the margin trajectory: GAAP gross profit jumped 156% year-over-year, with gross margin expanding to 71.4%—a 1,560 basis point improvement. Adjusted metrics tell a similar story, with adjusted gross margin reaching 77.7% (up 1,050 basis points).

Operating losses did widen to $27.7 million from $20.6 million annually, but adjusted net loss per share improved meaningfully to 5 cents from 12 cents. The cash war chest grew to $836.2 million—a staggering 2,750% increase from the $29.3 million held a year prior. This liquidity cushion provides runway for R&D acceleration and market expansion while losses persist.

Commercial Momentum Building

Customer acquisition momentum provides the strongest bull case. Quarterly bookings reached $2.4 million (up 80% sequentially), signaling intensifying demand. More significantly, D-Wave secured a €10 million contract for half-capacity access to its Advantage2 system in Italy, representing meaningful future revenue visibility.

Customer concentration speaks volumes about enterprise confidence: engagements span a major U.S. airline, a semiconductor foundry, a global chemical manufacturer, and a national police force. These aren’t experimental projects—they signal production-readiness validation for the Advantage2 platform and early monetization pathways for quantum capabilities.

Technology Roadmap Advancing

D-Wave’s dual-track strategy balances near-term revenue generation with long-term architectural ambitions. The Advantage2 system is operationally deployed for U.S. defense applications, while ongoing fluxonium qubit chip development and superconducting control chip fabrication represent tangible progress toward scalable gate-model quantum architectures.

These technical milestones, paired with expanding gross margins, suggest the company is moving past pure R&D phases toward genuine commercialization. Management expects operating expenses to rise approximately 15% sequentially in H2 2025, driven by go-to-market and R&D investments—a signal of conviction about market opportunities ahead.

The Valuation Trap Awaiting Investors

Here’s where waiting quotes from market analysts become particularly relevant. QBTS trades at a forward 12-month price-to-sales ratio of 250.58X—more than double its own one-year median of 151.70X and an astronomical 36X premium to the Computer and Technology sector’s 6.91X average. Even relative to Rigetti RGTI (480.97X P/S), QBTS carries substantial premium valuations.

The stock’s F-rated Value Score underscores this disconnect between operational progress and market pricing. A 245% year-to-date rally has already priced in substantial optimism about quantum market adoption timelines and D-Wave’s competitive positioning.

Risk Factors Warrant Caution

Several near-term headwinds deserve consideration. Quantum computing monetization remains in early phases, creating execution risk if deal flow or project delivery slows. Management’s guidance for rising operating expenses in H2 2025 suggests reinvestment confidence, yet the path to profitability remains undefined. Any project delays or customer hesitation could trigger sharp volatility in a stock trading at such elevated multiples.

The Bottom Line for Decision-Making

D-Wave Quantum exhibits solid long-term fundamentals: growing customer traction, improving margins, robust cash reserves, and tangible technological progress. However, the stock’s current valuation leaves minimal room for near-term gains and substantial room for disappointment.

For patient investors prioritizing risk management, waiting for a more favorable entry point—perhaps following a pullback toward 150-170X forward P/S levels—offers superior risk-adjusted returns. The quantum computing narrative isn’t going away, but the opportunity to buy QBTS at reasonable valuations likely will return. Zacks currently rates the stock as Rank #3 (Hold), reflecting this balanced perspective.