D-Wave and Quantum Supremacy: Implications For Investors

Key Points

• D-Wave Quantum revealed on March 12 that it had accomplished quantum supremacy for the first time ever.
• This momentous scientific and technological achievement bodes well for D-Wave's Advantage2 system, but widespread commercial sales and consistent profitability remain far off.
• D-Wave's recent accomplishment solidifies its position at the forefront of quantum computing, but investors may still be cautious due to the company's overextended shares.

D-Wave Quantum Inc. NYSE: QBTS is one of the leaders among a pool of smaller quantum computing companies competing against legacy tech giants like Microsoft Corp. NASDAQ: MSFT and Alphabet Inc. NASDAQ: GOOG. The quantum computing industry seeks to utilize quantum mechanics to develop computers capable of outperforming even the best supercomputers by many orders of magnitude. The incentive to develop this technology is incredibly powerful, as evidenced by multiple announcements from major tech firms of critical benchmarks in quantum computing chip design just this year.

Smaller players like D-Wave face an uphill battle when competing against Microsoft and their ilk on the research and development front, given the massive disparity in funds these companies have available to put toward chip design and testing. So it was all the more impressive when, on March 12, D-Wave announced that it had achieved a breakthrough demonstration of quantum supremacy—and it claimed to be the first and only example of this feat to take place so far.

What Is Quantum Supremacy, and What Does It Mean for D-Wave?

Quantum supremacy traditionally refers to the theoretical case in which a quantum computer can solve a complex problem that not even leading traditional supercomputers can solve. In the case of D-Wave's accomplishment, the company's Advantage2 prototype annealing quantum computer was put up against the Frontier supercomputer in an attempt to solve magnetic materials simulation problems.

D-Wave announced that its computer solved the problem in minutes, while the supercomputer would take close to a million years and massive amounts of electricity to do the same.

D-Wave's achievement is a scientific first and a landmark accomplishment in the highly competitive quantum computing industry. It also makes the company's Advantage system increasingly marketable; in the last quarter, D-Wave achieved record quarterly bookings of $18.3 million in part because it closed the first sale of the Advantage system to Germany's Jülich supercomputing center. In the fourth-quarter earnings call in March, executives announced that the company has significant additional interest.

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Should Investors Bet on D-Wave’s Future in Quantum Computing?

Quantum supremacy is a remarkable feat that has established D-Wave as a leading quantum computing company. However, many analysts expect that the widespread commercial application of quantum computers is still many years away. This means that D-Wave and other smaller firms in this industry lack a broad customer base and are thus not yet profitable.

D-Wave's latest quarter bookings, along with a 20% YOY increase in GAAP gross profit to $5.6 million for fiscal 2024, highlight its strong commercial appeal—even before launching a commercial product. However, its customer base is extremely niche: the company announced that it had a total of just 135 customers in fiscal 2024, made up of a mix of research institutions, government, and commercial customers. Net losses for the year widened to $143.9 million. On the other hand, D-Wave has some $300 million in cash available to it as of the end of 2024, which the company asserts should give it ample bandwidth in its efforts to reach sustained profitability.

A Word of Caution

Unsurprisingly, QBTS shares spiked based on news of the quantum supremacy feat and after D-Wave's earnings report. As of March 18, 2025, they are up more than 91% in the last five days and about 360% in the last year. D-Wave appeared overvalued even before the rapid rally following the groundbreaking news, especially after shares surged past $10. In particular, its P/S ratio is a whopping 328.3.

Investors with a suitably long-term view may find that D-Wave is affordably priced for now, but the stock may be more likely to give up some of these gains before the company achieves consistent profitability. Investors should carefully consider their time horizon before jumping in on D-Wave, though the recent quantum supremacy news is thrilling for the company nonetheless.

If and when a price reset does take place, it may present an even more compelling opportunity for most investors in the quantum computing space to enter a new position or expand an existing one.