What’s Happening With D-Wave Quantum Stock?

D-Wave Quantum (NYSE: QBTS), a quantum computing company, has seen its stock price surge by an impressive 1,360% in the last twelve months, reflecting the increasing interest in this potentially revolutionary field. Unlike traditional computers that use binary bits (0’s and 1’s), quantum computers utilize “qubits,” which can exist in multiple states simultaneously, allowing quantum computers to perform complex calculations and process vast amounts of data by exploring numerous potential outcomes at once. This capability has broad applications, from financial modeling and drug discovery to materials science.

Despite its promise, quantum computing faces a significant challenge: errors increase as systems become more complex with higher qubit counts. This makes the technology inherently volatile, a common characteristic of emerging, futuristic technologies. Despite these hurdles, significant advancements are being made. Companies like Google, IBM, and D-Wave have successfully built scalable quantum computers with dozens of qubits, a crucial step toward practical applications. IBM is a leader in this space, with its 1,121-qubit Condor processor and ambitious plans to develop 100,000-qubit systems by 2033. D-Wave has also introduced its Advantage 2 quantum system, specifically designed for complex optimization and AI tasks, boasting improvements in qubit connectivity, coherence, and energy efficiency. That said, if you are looking for an upside with a smoother ride than an individual stock, consider the High Quality portfolio, which has outperformed the S&P, and clocked >91% returns since inception. Separately, see – What’s Better – Circle Stock Or Bitcoin?

Image by Ugochukwu Ebu from Pixabay

D-Wave’s Approach and Offerings

D-Wave is known for its distinctive quantum annealing approach, contrasting with the universal “gate-model” quantum computers pursued by companies like Google, IBM, and IonQ. Their solutions, including high-performance quantum computers and cloud services, are readily accessible via their Leap quantum cloud service. Leap offers real-time access to their quantum computers and quantum hybrid solvers, alongside direct enterprise contracts and implementation support through their D-Wave Launch program.

D-Wave’s systems leverage superconducting qubits that operate at extremely low temperatures. As per the company, this specialized quantum annealing excels at solving complex optimization problems, finding applications across various industries like logistics, manufacturing, financial services, and drug discovery. In March, the company announced in a press release that its annealing quantum computer had outperformed one of the world’s most powerful classical supercomputers. This breakthrough occurred during the simulation of complex magnetic materials, a task highly relevant to the field of materials discovery.

D-Wave’s current offerings include the Advantage system with 4,400+ superconducting qubits, and the newer Advantage2 system, touted as “the most powerful and connected quantum computer in the world, featuring 20-way qubit connections.” Advantage2 prototypes, utilizing approximately 1,200 qubits, have demonstrated quantum advantage in scientific applications, including quantum magnetic phase transitions.

D-Wave asserts its position as “the world’s first commercial supplier of quantum computers,” and uniquely, “the only company building both annealing and gate-model quantum computers.” This highlights their continued innovation and commitment to delivering practical quantum solutions.

Investment Outlook and Risks

While quantum computing shows immense promise, it remains in a developmental stage and isn’t yet ready for widespread practical implementation. D-Wave’s revenue base of $22 million in the last twelve months is relatively small, and the company reported an operating loss of $71 million over the same period.

D-Wave stock is highly susceptible to adverse market conditions, demonstrating significantly higher volatility compared to the broader market. For instance, during the 2022 inflation shock, QBTS stock’s value plummeted by 97%, whereas the S&P 500 experienced a peak-to-trough decline of 25.4%. This highlights the considerable risk of QBTS stock dropping during unfavorable market conditions.

Like most quantum computing stocks, QBTS represents a high-risk, high-growth potential investment. Key factors influencing its trajectory include continued technological improvements and managing costs. D-Wave could potentially sell numerous quantum computers in the coming years, which might continue to drive its stock higher.

As an investor, a bet on QBTS is a bet on the future potential of quantum computing and D-Wave’s position within that future. The company is one of the pioneering providers of commercial quantum computing accessible through platforms like Amazon Braket and AWS Marketplace, and boasts large customers such as Lockheed Martin, Volkswagen, Mastercard, Deloitte, Siemens Healthineers, and Google/NASA. As the technology continues to advance, we can expect to see improved accuracy from a broader range of companies in the quantum computing sector.

Looking at its past performance, QBTS stock has been quite volatile when compared to the broader markets. Returns for the stock were -86% in 2022, -39% in 2023, and 854% in 2024. In contrast, the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, is considerably less volatile and has comfortably outperformed the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.

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