Since March 23, when I last wrote on Forbes about D-Wave Quantum, the quantum computing provider’s stock has popped 57%.
Much of that gain has come in the wake of the company’s high revenue growth and improved margins in the first quarter of 2025. Underlying this growth is a fundamental shift in customer behavior – from renting access to D-Wave’s quantum computers to buying them from the company.
Will the stock continue to rise? Based on my March 27 interview with CEO Alan Baratz, I see compelling reasons that could happen – and some reasons for caution. Read on for the details.
“The first quarter of 2025 was arguably the most significant in D-Wave’s history, especially in terms of our unique ability to deliver quantum value today to our customers and the scientific community,” Baratz said in a company statement.
“We recognized revenue on our first Advantage system sale to a major research institution, moved an additional customer application into commercial production, and became the first to demonstrate quantum supremacy over classical computing on a useful real-world problem, he added. ”The end result was a record revenue and gross profit quarter.”
D-Wave Quantum’s Rapid First Quarter Growth
D-Wave stock rose 51% May 8 after reporting Q1 2025 results that exceeded analysts’ expectations.
Revenue jumped 509% to $15 million in the first quarter – $4.5 million more than the FactSet consensus, according to Barron’s. Due largely to the $12.2 million sale of a quantum computing system, D-Wave’s operating loss fell 69% to $5.4 million despite a 31% rise in operating expenses, noted Barron’s.
The purchaser of the computing system – an Advantage quantum machine – was Germany’s Jülich Supercomputing Centre. “From a numbers perspective, it was all about the system sale,” Baratz told Barron’s. “Up until the end of last year, our business model was focused exclusively on professional services and quantum-computers-as-a-service.”
Selling hardware instead of services has different cash flow characteristics. With the latter, “it takes time to build that business,” Baratz said. “As you bring more and more customers on over time, you build a base of recurring revenue. When you sell a system, you get that quick hit of revenue. And frankly, until recently we didn’t really see that opportunity for D-Wave,” he explained to Barron’s.
In March, a paper in Science, claimed D-Wave had achieved quantum computing supremacy, according to my Forbes post. The claims of the paper were controversial.
D-Wave said it completed magnetic materials simulations “in under 20 minutes with a quantum computer — a task that would have taken nearly a million years on a leading supercomputer at Oak Ridge National Laboratory,” said D-Wave senior distinguished scientist Andrew King, according to my post. However, academics disputed D-Wave’s claims, as my Forbes post discussed.
The Jülich sale and the Science paper “generated a lot more interest” in D-Wave’s operations, Baratz told Barron’s. “When we put out the quantum supremacy result, it got the attention of supercomputing centers and national labs around the world who came to us and said, “Hey, that’s a really interesting result. We’d like to duplicate it,’ ” he added.
While the technology will not be commercially scalable for years, D-Wave clients include Mastercard and Japanese wireless carrier NTT Docomo. Moreover, Baratz said the company is talking with potential customers – including unnamed airline and mobile gaming companies, noted Barron’s.
Baratz Is Optimistic About D-Wave’s Future
D-Wave – which reported $304 million in consolidated cash at the end of March 2025 – is optimistic about the company’s future. How so? “Three other super computing centers want to own our systems,” Baratz told me in a March 27 interview.
That could be because D-Wave’s systems are proving measurable business value. NTT Docomo is using the technology to optimize cell tower resources — reducing the time to accomplish this optimization from 25 hours to minutes and enabling the cellphone services provider to increase by 15% the number of cell phone calls it can process per tower, Baratz explained.
Pattison Food Group – which operates more than 100 e-commerce delivery stores – has used D-Wave to reduce by about 80% the weekly manual efforts for delivery scheduling, he added.
In addition, Ford Otozan, a Turkish assembler of Ford transit vehicles, uses an application developed with D-Wave’s annealing quantum computing technology to reduce scheduling time by “over 80%,” according to a D-Wave release.
D-Wave also achieves significant energy savings for blockchain mining. “Quantum computing is very efficient for solving hard computational problems,” Baratz told me. “With blockchain proof of work applications, quantum computing uses one-one thousandth of the energy of traditional bitcoin mining,” he added.
Potential Business Risks That Could Affect D-Wave Stock
I see two significant risks for investors in D-Wave stock. First, the share price may have risen to reflect revenue and profit that may not be realized due to longer sales cycles. Second, Nvidia has become more interested in competing in the quantum computing market – which could be a mixed blessing for D-Wave.
D-Wave reported strong customer interest in the company’s products. “We’re seeing a very, very healthy sales pipeline,” D-Wave Chief Financial Officer John Markovich said in a May 8 investor conference call.
Since the prospects include “a fair number of larger organizations, including a number of Forbes Global 2000 companies,” he added, the potential revenue from these companies is significant. Yet the complex procurement processes mean longer sales cycles, Markovich told investors.
Due to the significant technical problems remaining before quantum computing can be deployed at scale, in January, Nvidia CEO Jensen Huang said quantum computing could be decades away from realizing its economic promise, noted my March Forbes post.
However, by March Huang had changed his mind – announcing a bet on a Boston-area research center to help Nvidia overcome the impediments to realizing the technology’s potential.
If Nvidia – and other larger companies such as Google – were able to build quantum computing systems that performed better for customers, they could win over D-Wave’s customers and prospects. Years may pass before it becomes clear whether that will happen.
For now, D-Wave stock seems fairly valued. Wall Street analysts set an average price target of $12.83 – implying roughly 4% downside based on the company’s May 19 stock price of $13.28, according to TipRanks.