Analysts Make a Quantum Bet on D-Wave's Cryogenic Packaging

Key Points

• D-Wave Quantum announced a strategic cryogenic packaging development initiative late in July.
• Aided by a partnership with NASA, this may help D-Wave to develop more robust, scalable processors, including via a gate-model approach.
• While unlikely to impact the company's stock performance in the near term, this signal that the firm is continuing its aggressive pace of technological development may show its responsiveness to criticism from recent months regarding its focus on annealing technology.

In the last week of July, D-Wave Quantum Inc. NYSE: QBTS received two new Buy ratings from analysts at Canaccord Genuity and Rosenblatt Securities, as well as a $2 price target boost from B. Riley.

These analyst moves come ahead of D‑Wave’s Q2 earnings, scheduled for August 7, 2025, which will provide more context for the company’s revenue trajectory and profitability outlook—either through sales of its quantum systems or, potentially, through innovative partnerships—which investors have been waiting for.

So why the sudden new votes of confidence despite a lack of an update on the earnings front?

D-Wave's Cryogenic Packaging

One potential reason is D-Wave's recent announcement of a new strategic development initiative centered around cryogenic packaging. While this process is likely difficult for anyone without significant technical expertise in quantum computing to grasp fully, suffice to say cryogenic packaging could be transformational for D-Wave.

Cryogenic packaging is a specialized method of enclosing and interconnecting quantum computing chips so they can operate at extremely low temperatures, often near absolute zero. These frigid conditions are necessary to maintain the quantum states of qubits, which are incredibly delicate and prone to decoherence from heat, noise, 

Why Gate-Model Matters

Gate-model quantum computing is an alternative approach to quantum computing from D-Wave's annealing tech. Annealing is known for its ability to solve optimization-related problems, making it very effective at certain applications but less so for generalized quantum computing needs. 

In contrast, gate-model tech is known to be more versatile. For that reason, some analysts have suggested gate-model approaches may be more likely to achieve widespread marketability than annealing approaches. Some of the biggest tech firms exploring quantum, like IBM NYSE: IBM and Alphabet Inc. NASDAQ: GOOGL, have predominantly focused their efforts on gate-model for this reason.

If cryogenic packaging facilitates a rapid development in D-Wave's gate-model technology, it would put to rest the arguments of some bearish analysts who have suggested the company is pursuing a technological dead end. Thanks to its work with JPL, D-Wave has already achieved end-to-end superconducting interconnect between chips, a crucial step in this process. 

Beware the Possibility of Overhype

For an idea of how the broader market reacted to D-Wave's recent announcement, it's worth noting that shares of the company did not spike following the news. In fact, QBTS fell by some 15% in the several days before and after the announcement.

As with so many developments in the quantum space, it can be difficult for individual investors to assess how significant a technological breakthrough may be for a particular company. In this case, it may be that D-Wave's other outstanding issues—its history of losses and struggles with profitability and revenue, say, or its repeated dilutive actions in order to bulk up its cash reserves—are more immediately concerning.

Still, while investors should beware the potential to overhype a development like cryogenic packaging, it can point to D-Wave's continued efforts to grow its technological footprint and, with the possibility of a move toward gate-model, to respond to criticism of its prior strategy.

To determine just how important that may be in the near term, investors will likely need to assess this technological update in conjunction with a fuller view of D-Wave's performance in the most recent quarter via its earnings report.

The report will be the real test of whether the company can deliver on both innovation and financial execution.

For now, D-Wave remains an analyst favorite, with all 10 analysts tracked by MarketBeat assigning it a Buy rating.

Thanks to recent coverage, the company now has upside potential of about 2% based on a consensus price target of $16.70.