This Quantum Stock Rocketed 700%+ in Just 1 Year—What’s Next?

Given the persistent confabulation issues with all major AI models, the sector is still viewed as uncertain. However, the uncertainty around quantum computing is much more fundamental. After all, both cornerstones of QC – superposition and entanglement – are tenuous to be robustly controlled at scale. This is why quantum computing is now largely viewed as complementary rather than a potential standalone development.

“Future problems that are solved by quantum computers will always be solved by hybrid setups, where you have a classical computer doing the part of the algorithm where classical computers are more efficient, and a quantum computer performing the part of the algorithm where quantum computers are more efficient.” Matt Langione, managing director at Boston Consulting Group.

As we’ve covered previously in March, D Wave Quantum Inc (NYSE:QBTS) seems to lead the way in this hybrid quantum approach. On Thursday, the company reported its Q1 2025 earnings, signaling a path to profitability. But is this a signal toward the practicality of quantum computing as well?

D-Wave’s Earnings Explained

Ending March 31st, D-Wave Quantum reported a 509% boost in revenue from the year-ago quarter. Although this percentage is high when viewed alone, it is a result of a small business model, representing a jump from $2.5 million to $12.5 million.

Despite the revenue uptick, profitability is still negative, at a $5.4 million net loss, yet substantially higher than net loss of $17.3 million in Q1 ‘24. The main reason for the profitability improvement was the sale of a QC system worth $12.2 million.

At this point, investors should remind themselves that it took Palantir (NASDAQ:PLTR) 20 years to cross profitability milestone in Q3 2023, its stock having skyrocketed 450% over a one-year period. And similarly to Palantir, D-Wave’s client base is roughly evenly divided between the governmental/research and commercial sector, at 64 vs 69 clients respectively.

Notably, D-Wave’s customers only increased by 5 compared for the last four quarters compared to the previous four. This is again reminiscent of Palantir’s concentration of clients, as a novel provider of governance technology.

Likewise, D-Wave should be considered a novel provider of quantum computing that is quite important to USG. At the Milken Institute Global Conference on Monday, US Treasury Secretary Scott Bessent noted that “we have to win in AI and quantum…if we don’t win, everything else doesn’t matter”.

Such sentiment suggests a private-public partnership (PPP) push, which is again similar to how Palantir gained prominence. And given the small size of D-Wave’s business at this point, it makes the company much more susceptible to valuation hype following future acquisitions of its QC systems.

In comparison with heavy-weighted Big Tech companies such as Alphabet (NASDAQ:GOOGL) or Microsoft (NASDAQ:MSFT) exploring QC, it would then make more sense to gain QBTS exposure, as the valuation space to lock-in profits would be greatly larger.

What Is D-Wave’s Practical Approach?

Now that D-Wave holds a record high $304.3 million cash balance, there is a runway ahead for more research and more sales to USG, which has to “win in AI and quantum”. The company made a strategic choice to focus on quantum annealing devices against rivals focused on universal/gate model systems.

D-Wave’s approach leads to more effective tackling of optimization problems, alongside greater noise tolerance and scalability against gate-based quantum computers. To demonstrate the validity of this approach, the company published a peer-reviewed paper, “Beyond-classical computation in quantum simulation” in Science.

However, although some researchers agree with those findings, others suggested that D-Wave’s calculations could’ve been tackled with classical computers just as well.

Whatever the case may be, D-Wave’s Advantage2 processor appears to be on the road to solving real-world problems. In other words, even if there wasn’t a real advantage over classical computing, this may be a matter of time.

This is the quantum uncertainty, no pun intended, in which investors have to currently operate. Yet, the company already sold its QC system to the German Julich Supercomputing Centre (JSC) in February, establishing credibility in doing so. And it is this credibility that just might push USG to arrange beneficial arrangements for D-Wave via the PPP framework.

At this point of D-Wave’s business, that kind of engagement would yield even greater revenue leaps, perhaps even into straight profitability.

D-Wave Quantum’s Price Targets

QBTS stock is up nearly 14% year-to-date, rallying on Wednesday after a steep drop in the second half of March. Over a year’s period, investors had multiple opportunities to buy the dips and lock-in profits.

Again, the quantum computing uncertainty is such that it allows such speculation, and it will continue to do so. Against the current price of $11.07, post-Q1 earnings, the average QBTS price target is $9.58 per share.

The bottom estimate, per WSJ forecasting data, is not far off at $8 while the ceiling price target for QBTS stock is $12 per share. All six analysts view QBTS stock as a buy at this point in time. However, it would be prudent to wait after the post-earnings hype subsides.

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Neither the author, Tim Fries, nor this website, The Tokenist, provide financial advice. Please consult our website policy prior to making financial decisions.

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