D-Wave Quantum Inc. (NYSE: QBTS) has been experiencing a remarkable surge in its stock performance, reflecting broader trends within the quantum computing industry. As of now, shares of D-Wave are priced at $44.82, marking a gain of 4.08% for the day. The stock has skyrocketed by over 243% year-to-date (YTD) and has nearly doubled in just the past month, with an astounding 3,200% increase over the past year.
Despite such extraordinary gains, experts are cautioning investors. With a staggering price/sales ratio of 1,279.8, some view D-Wave as one of the most overhyped stocks available. The fundamental question that arises is whether the company’s financial health can justify its soaring stock price. Short-selling firm Kerrisdale Capital has raised doubts about D-Wave’s commercial capabilities earlier this year, generating skepticism regarding its technological viability.
Months following this scrutiny and a dramatic increase in stock value, concerns linger regarding D-Wave’s commercial prospects. Investing analysts express that the stock is likely due for a correction, a sentiment further supported by Zacks’ recent downgrade.
One argument against D-Wave relates to the limitations of its quantum annealing technology, which focuses primarily on optimization problems rather than offering broader problem-solving capabilities. However, D-Wave is actively working to address these concerns, announcing projects aimed at developing gate model technology—an alternative to annealing. This diversified technological approach could help D-Wave maintain its competitive edge within the quantum sector.
Moreover, there is growing recognition from outside the quantum industry of the potential applications of quantum annealing technology. D-Wave has executed successful collaborations with various organizations, including agriculture software firm Verge Ag, Japan Tobacco, and the North Wales Police, highlighting the technology’s versatility across different sectors.
Despite these achievements, D-Wave’s actual commercialization potential remains uncertain. In its most recent quarter, the company reported greater-than-expected losses per share and an alarming 44% year-over-year increase in adjusted EBITDA losses. Although revenue grew by approximately 42% to just over $3 million, it still falls well below what investors expect to support the current valuation.
D-Wave is not alone in its volatile performance; competitors such as Rigetti Computing (NASDAQ: RGTI) have seen even greater stock surges, boasting returns exceeding 5,100% over the past year. With the entire quantum computing market trending similarly, it may become increasingly challenging for investors to distinguish among companies.
As the quantum sector continues to evolve, one or several firms may emerge as leaders. Investors now face the critical decision of determining whether D-Wave will rise to prominence or potentially fall behind its competitors. While currently rated as a Moderate Buy by analysts, D-Wave has not attracted the same attention as several other stocks that analysts predict may be better investment opportunities.