D-Wave Quantum

D-Wave Quantum develops and sells quantum computing systems and software to companies and governments. Its core commercial technology is quantum annealing: machines designed to solve complex optimization problems in manufacturing, logistics, financial services and telecommunications.

D-Wave earns revenue in three ways. Developers and enterprises access its systems through the Leap cloud platform; larger customers can purchase physical systems; and D-Wave runs professional-services engagements where it identifies a customer's problem, builds the quantum solution, and hands over the findings to implement.

Typical uses are optimization problems such as delivery routing, employee scheduling and, above all, supply chains. Customers pay D-Wave to find the best available solution to problems that strain classical approaches.

Classical computers work in bits, each either 0 or 1. Quantum computers use qubits, which can combine both states, so they approach certain problems in a fundamentally different way.

Quantum computing is still early in commercialization, and most companies have not adopted it in day-to-day operations. Adoption is growing, though, and I see a loose parallel with AI in the 2010s: years of investment ahead of broad adoption, followed by rapid change. The paths will not be identical, but the mix of real demand and large unknowns is similar.

At the time of writing, markets were dealing with inflation above the Fed's 2% target, a 25 bp hike to a 3.75–4.00% target range, and oil elevated by disruption in the Strait of Hormuz. The 10-year Treasury yield had moved above 5%, which raises the bar for long-duration growth equities.

My stance was to move cautiously but without panic. Equities had recently hit all-time highs and rallied after the hike, and the path of rates depended heavily on whether shipping through the Strait could be kept moving.

Revenue is small but growing quickly, and contracted demand is well ahead of recognized revenue. Bookings are not guaranteed revenue, but they do show demand.

D-Wave recognized revenue from 100 customers in the first half of 2026, more than half of them commercial enterprises. Forbes Global 2000 companies accounted for 48.5% of customer revenue.

The company remains unprofitable: EPS of –$0.18 for the first half of 2026 and –$0.13 for Q2 2026, against a –$0.09 consensus estimate. Adjusted EBITDA loss was $69.9M over the same period, a reminder of how much cash development consumes.

Alan Baratz has been CEO since 2020, after leadership roles at Cisco, IBM and Sun Microsystems. The acting CFO brings about 25 years of finance and accounting experience, which matters as the company tries to commercialize at a larger scale.

No company has established itself as the clear leader. D-Wave competes with IonQ, IBM, Google and Quantinuum, among others, and approaches differ: D-Wave focuses on annealing for optimization, while gate-based players like IonQ target a broader range of problems. IBM and Google have far more resources.

Capital is flowing into the space. Quantum startups raised about $12.6B in 2025, so competition for talent and customers is intense.

D-Wave stood out to me because quantum computing is beginning to move from research into real monetization, and D-Wave's numbers show it. Revenue grew 179% in 2025 to $24.6M. In the first half of 2026, revenue was only $5.9M, but bookings were $35.5M, roughly six times revenue.

The company ended June with $40.7M in remaining performance obligations, about 57% expected to be recognized within 12 months, so much of the work already contracted has yet to show up as revenue. It is also attracting outside capital, including a $100M arrangement tied to the U.S. CHIPS and Science Act.

The balance sheet explains why this thesis needs time. With $546.2M in cash and securities against $73.5M of operating cash used in the first half, D-Wave has the runway to keep investing in R&D.

At $17.48 and a $6.51B market cap, D-Wave traded at roughly 265× its 2025 revenue. That multiple is only justified if bookings and obligations convert into recurring service revenue, and that conversion has not happened yet. The pitch did not set a price target or build a DCF. The valuation risk is managed through position size instead.

The biggest risk is valuation and speculation. The market is pricing in very large growth. If D-Wave cannot turn bookings into revenue and grow customer usage while burning cash, it would need to raise more capital or dilute shareholders.

I rated QBTS a long-term Buy. The industry has large upside, and D-Wave already offers exposure to real demand through bookings and performance obligations, with the cash to keep building. Given the valuation and volatility, I would size it at about 2–4% of a portfolio.