Computer Processing Hardware · #91 in the Retail 100

D-Wave Quantum

QBTS

Our rating: hold
12-month target: $12.66 +25.4%
Expected vs. S&P 500: +6.9 ptsSee the math
Next earnings: Nov 10In 5 days

Customers using D-Wave's quantum computers for daily work paid $1.3M of cloud fees in the first half, so this year's forecast rests on two machines shipping this quarter.

Summary

D-Wave sells annealing quantum computers, which tackle optimization problems such as scheduling today, a narrower approach than the gate-model machines IonQ and IBM are building. Its cloud service and the consulting that feeds it bring in only about $3M a quarter. Analysts expect about $32M of revenue this fourth quarter, mostly from two machines that management says will likely ship by December. The stock, down more than half this year, depends on those installations landing on time and turning into repeat orders.

$10.37

-$22.72 (-68.66%)Past year

What D-Wave Quantum does

D-Wave builds annealing quantum computers, a narrower kind of machine than rivals build, designed only for optimization problems such as scheduling and routing. It rents time on them over the cloud and sells whole machines.^1,2,13,23

What it sells

Cloud access (QCaaS)61% of revenue, H1 2026
Subscriptions to run problems on D-Wave's machines over the internet. The only steady revenue, growing as customers move from tests into daily use.
Professional services32% of revenue, H1 2026
D-Wave's experts help customers turn a business problem into one its machines can solve, often the first step before a cloud subscription.
Whole systems6% of revenue, H1 2026
On-site machines for research centers. The first sale brought $13.7M of revenue in 2025; Florida Atlantic agreed to pay $20M. Most forecast growth.

Who buys it

Companies such as NTT DOCOMO, AT&T and Optum, plus research centers like Florida Atlantic University. Businesses were 62% of second-quarter revenue. One unnamed customer was 41%, so a single contract swings results.

Where you've seen it

Japan's largest mobile carrier, NTT DOCOMO, uses a D-Wave application to cut network signaling traffic for its subscribers.

How the business makes money

The backstory

D-Wave bet early on annealing, a quantum approach that only handles optimization problems, while IBM, Google and IonQ build gate-model machines aimed at broader uses like chemistry. Annealing works today, but sales stayed near $9M a year in 2023 and 2024. CEO Alan Baratz's answer has three parts: move cloud customers from experiments into daily use, sell whole machines to governments and universities, and enter gate-model computing by buying Quantum Circuits in January for about $540M in cash and stock.

D-Wave earns steady but small cloud fees and large, irregular machine sales. Both must grow fast enough to cover spending that is now over $50M a quarter.^{1,2,3,7,13,18,20,23}

1 · Door openerConsultingConsultants turn a business problem into one the machine can solve. DOCOMO's second application cut peak network signaling traffic by 65%.
2 · Recurring revenueCloud useWorking pilots become paid subscriptions. Production use was over a third of first-half cloud revenue, up from a tenth.
3 · Big ticketsMachine salesGovernments and universities buy machines to own. Florida Atlantic University agreed in January to pay $20M for one.
4 · FundingCash pileCash from 2025 share sales pays the bills, helped by Commerce Department chip funding. Analysts expect about $140M a year of cash burn through 2028.
5 · Next betGate modelQuantum Circuits adds a gate-model design. Baratz said in August he expects significant gate-model cloud revenue only around 2032.

Advantages

Machines already doing paid daily work

Major advantage

D-Wave's biggest advantage, and the reason to own it over rivals. Annealing handles narrow optimization problems now, so customers like DOCOMO and Optum use it in daily operations, while D-Wave says rivals' gate-model machines are still in research.^3,13,14

Years of cash on hand

Strong advantage

Strong for now. D-Wave held $546M of cash and securities in June after selling shares in 2025, against forecast burn of about $140M a year, so it need not sell stock at today's lower price soon.^1,18

A government buyer and backer

Supporting

Helpful, but small next to costs. A Commerce Department award of up to $100M funds chip development, and government-funded labs and universities are the main buyers of its machines.^7,11,3

What's changing

A rough autumn before the big quarter

Since August, D-Wave missed second-quarter revenue forecasts, lost its CFO and drew a shareholder lawsuit, and the stock fell about 45%, despite a September Commerce Department chip award. It also delivered an Advantage2 machine to Italy under a cloud-capacity deal, opened a gate-model simulator to customers such as BBVA, and extended its chip-making deal with SkyWater, the foundry rival IonQ bought in July. Fourth-quarter installations are now the test.^{4,5,7,8,9,10,11,12,19,21,24}

Competitors

Who else an investor would consider, and how they compare.

Company	Market value	What it does	Compared with D-Wave Quantum
D-Wave Quantumthis stock	$3.94B	D-Wave builds annealing quantum computers, a narrower kind of machine than rivals build, designed only for optimization problems such as scheduling and routing. It rents time on them over the cloud and sells whole machines.
IonQIONQ	—	Builds gate-model computers from trapped ions and now owns chip foundry SkyWater.	IonQ chases broad future uses; D-Wave sells narrow optimization that works today.⁹
Rigetti ComputingRGTI	—	Builds superconducting gate-model chips, selling research access and small on-site systems.	Rigetti sells research tools; D-Wave sells production optimization plus a later gate-model bet.
IBMIBM	—	The largest gate-model effort, sold through IBM's cloud to big companies and labs.	IBM can fund quantum for decades; D-Wave lives on its own cash pile.
Classical optimization softwareprivate	—	Ordinary solvers like Gurobi that tackle scheduling and routing on regular computers.	D-Wave's real competition: customers pay only if annealing beats these solvers.

Bull vs. bear: two bets on the same stock

1
A share is a small slice of the company. Its value comes from the profits the company will make in the future.
2
Nobody knows those profits yet. Buyers (bulls) pay today's price betting they'll beat what most people expect. Sellers (bears) bet they'll fall short.
3
When results come in, the price moves toward whichever side was right, and that side makes money.

The question they disagree on

Will D-Wave report the roughly $32M of fourth-quarter revenue analysts expect, more than its revenue in all of 2025?^{1,2,3,4,5,6,7,8,13,16,21,25}

Bull case: why buyers buy

If two machine installations land this quarter and cloud customers keep moving into daily use, D-Wave proves annealing sells today and earns time to build gate-model machines.

Customers are using it for real work. D-Wave says six customer applications run in daily operations, including at Optum and NTT DOCOMO.
Signed orders are piling up. Backlog of contracted revenue reached $40.7M in June, up nearly eightfold in a year.
The cloud business is speeding up. Cloud revenue grew 50% last quarter from a year earlier.
Washington is backing it. The Commerce Department will fund up to $100M of chip work as milestones are met, and took about 2% of the company in return.

Bear case: why sellers sell

If installations slip into 2027 and cloud sales stay near $2M a quarter, a company valued at more than 60 times its expected sales has little to show for it.

Machine revenue slips easily. D-Wave books a machine sale over about two quarters of building and installing, its former CFO said, so a late site pushes revenue into 2027.
No permanent finance chief for the big quarter. CFO John Markovich retired September 2, and a finance vice president is acting CFO while D-Wave searches.
Spending far outruns sales. Operating expenses nearly doubled to $55M last quarter, more than even the hoped-for fourth-quarter revenue.
Shareholders are suing. A class action filed in October says D-Wave overstated its prospects from February to August 2026; the claims are unproven.

Where Delphi landsholdWe think today's price already weighs both sides fairly.See why

What to watch

The numbers that will settle the debate.

Cloud (QCaaS) revenue▲ improving

$1.86M in Q2 2026, up 50% from $1.24M a year earlier²

The only recurring revenue; shows whether daily-use customers are multiplying.

Contracted backlog (RPO)▲ improving

$40.7M at June 30, 2026, about 57% expected within 12 months¹

Mostly machine orders; shows whether the big fourth quarter is already signed.

Professional services revenue▲ improving

$0.93M in Q2 2026, up 18% from $0.79M a year earlier²

Consulting projects feed future cloud subscriptions, so growth here leads cloud growth.

Next earnings report

Nov 10

In 5 days

Expected earnings per share: -$0.10
Expected revenue: —

What to listen for: Whether the Florida Atlantic machine and a second, unnamed system ship this quarter as planned, and whether management still says the fourth quarter will be most of the year's revenue.^3,4,11,16

What would prove this wrong

✕Fourth-quarter revenue lands well below $20M as installations slip.
✕Cloud revenue stops growing as production customers fail to renew.
✕D-Wave sells large amounts of new stock before 2028.
✕Gate-model rivals solve optimization problems better than annealing does.

Our ratingHoldas of Nov 2 close, $10.09 · what ratings mean

Annealing does real paid work, but at about 64 times expected sales the upside rests on lumpy machine installations, so expected gains only modestly beat the S&P 500.

12-month target: $12.66 (+25.4%)
S&P 500, same method, with dividends: +18.5%
Expected vs the market: +6.9 points

The math behind the recommendation

Three 12-month price scenarios, weighted by probability, compared with the S&P 500 under the same method.

Now $10.09

Target $12.66

bull case20% likely

$18.54 +84%

Both machines are installed on time, cloud revenue keeps growing about 50% a year, and new machine orders push 2028 sales above the $148M forecast.

$0.37 sales per share × 49.9 = $18.54

base case45% likely

$13.32 +32%

Installations land between late 2026 and early 2027, cloud grows steadily, and 2028 sales roughly match forecasts while losses stay near $140M a year.

$0.33 sales per share × 40.1 = $13.32

bear case35% likely

$8.44 -16%

Installations slip, few new machine orders follow, and cloud stays near $2M a quarter, so 2028 sales fall well short and the valuation shrinks.

$0.28 sales per share × 30.2 = $8.44

Why these odds: Loss forecasts improved slightly over 90 days, but D-Wave missed revenue last quarter and EPS in two of four, and Q4 hinges on two machines shipping. History covers only four years since the 2022 listing. About 396M diluted shares; no new stock sales assumed, since cash covers forecast burn.

How the prices are built: Wall Street expects sales per share of $0.33 for the year starting a year from now (analysts range from $0.23 to $0.41). Today the stock trades at 56.4 times next year's sales per share; its five-year middle is 60.2. Because sales per share is forecast to grow fast, valuations are cut 30%, since fast growth rarely keeps its price.^{1,2,4,8,16,17,18,19,20,22}

What tests the call: Q3 2026 results and fourth-quarter installation update (date estimated; not yet announced) (Nov 10)

Buy means expected to beat the S&P 500 by 10+ points over 12 months; Sell means expected to trail it by 10+. Inputs gathered Oct 28; the recommendation updates with the price every day. Model-generated, not personalized investment advice. How ratings work · Track record

What the price assumes

At $10.09, D-Wave Quantum is priced about where it usually is

D-Wave Quantum trades at 56 times the sales analysts expect over the next 12 months. That ratio is the multiple: what investors pay today for each dollar of a year's sales. That is below its five-year middle of 60.

Analysts expect sales to grow about 85% the year after.

D-Wave Quantum multiple: 56×
Its usual multiple: 60×
Base case: +32%
Bear case: −16%

The skewOur bear case loses about 51¢ for every $1 our base case makes. That ratio, how much you stand to lose against how much you stand to make, is the skew.

Last earnings

Q2 2026 results, reported Aug 6

Revenue missed and spending doubled, but first-half bookings of $35.5M promised a much bigger fourth quarter.^1,2,3,4,19

Reported Aug 6	Expected	Actual	Difference
Earnings per share	-$0.10	-$0.13	-30.0%
Revenue	—	—	—

Beat expectations in 2 of the last 6 quarters

Stock reaction: -9.3% on the day of the report (closed $19.41), then +7% the next day

Why the stock moved

Down: revenue of $3.1M missed the $4.0M forecast and was flat from a year earlier.
Down: operating expenses nearly doubled, so the adjusted loss widened to $37.1M.
Down: gross margin fell to 55% from 64%, which D-Wave blamed mainly on higher staff costs.
Recovered: management said the fourth quarter will bring most of 2026's revenue as machines are installed.

What it means for the stock: Pushed the story later: almost everything now rides on fourth-quarter installations, so the next report decides whether bookings become revenue.