Topline
D-Wave Quantum Computing’s share price is up 46% this year. But can the company’s technology scale faster than what IBM and Google are promising?
D-Wave Advantage2
Kent Kallberg
Key Facts
D-Wave Quantum shares are up 46% in 2025 with help from a 509% pop in first quarter revenue.
However, the stock has lost 28% of its value since peaking last month at $19.76.
IBM and Google use a different gate-based technology which could scale to much larger market opportunities than D-Wave’s annealing approach does.
Nevertheless, quantum computing’s future looks bright.
D-Wave Quantum stock has risen 46% in 2025. While that sounds good, the stock has lost 28% of its value since peaking in May.
Does this represent a buying opportunity? The bull case for D-Wave is based on a 509% increase in revenue in the first quarter abetted by a new business model in which the company sells its so-called annealing-based computers to organizations.
The bear case hinges on competition from giants such as IBM and Google which promise a larger market opportunity for their gate-based approach to quantum computing. If these giant rivals deliver on their promise, D-Wave risks being more of a niche company.
D-Wave is optimistic about its future due to the value its products offer companies. “What is currently available is what customers want,” D-Wave Vice President of Quantum Technology Evangelism Murray Thom told me in a June 17 interview.
“We are the sixth generation of quantum computing currently available in 42 countries giving 99.9% sub-second response time. Companies can use quantum computing to build applications and achieve concrete ROI,” he added.
MIT sees opportunity ahead in quantum computing — if key problems are solved. “There are breakthroughs in quantum computing,” MIT research affiliate Elif Kiesow told me in a June 17 interview.
“IBM expects to launch its fault tolerant QC in 2029. QC is capable of useful computing it can carry information and doesn’t lose information. You can’t talk about qubit counts without talking about error rates which are outlined in chapter 10 of the Quantum Index Report 2025,” which Kiesow co-authored.
Will D-Wave enjoy expectations-beating growth or will other technologies prevail? I think it is too early for a clear answer. This suggests investors should diversify their bets among potential winners.
Why D-Wave Sees A Bright Future
D-Wave sees a bright future. In the first quarter of 2025, the company’s high revenue growth and improved margins helped propel its stock up significantly. 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, noted my May Forbes post.
The company’s 509% revenue increase resulted from the $12.2 million sale of a quantum computing system to Germany’s Jülich Supercomputing Centre. Selling a quantum computer system differs radically from providing quantum-computing-as- service, explained D-Wave CEO Alan Baratz, noted my Forbes post.
More organizations want to buy D-Wave’s machines. 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 providing 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.
In May, 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 despite a longer sales cycle than is required for D-Wave QCaaS business.
D-Wave sees its annealing approach to QC as superior to IBM’s and Google’s gate-based QC technology. “We do annealing,” Thom told me.
“We use quantum effects to perform calculations that are too hard for classical computers. We use the resources of the quantum effect to move between better solutions more quickly. We plan for moving from good to better solutions,” he added.
D-Wave sees a significant flaw in the gates-base approach. “An alternative QC solution — gates — uses quantum to store interim solutions more effectively,” he explained.
QCs are imperfect. If there is an error causing a loss of the quantum state, a classical computer can take over the solution-finding process. “When the superhighway closes, you take the off ramp to a side road (classical),” Thom explained.
Annealing is able to recover from such an error more quickly. “This allows the QC to relax so it can return to its quantum state. With annealing, you can continue solving the problem from the point of loss; with gates, you have to start back from the beginning,” he concluded.
D-Wave is also excited about QC and artificial intelligence. “Japan Tobacco is using it to do drug discovery more effectively,” he explained.
Another client is saving thousands of scheduling hours using D-Wave’s services. “Paddison Food Group is using QC to schedule employees in a grocery stores,” he told me.
“Currently that is being done by senior people. It is hard to train others to produce a high quality schedule. QC makes it easier to schedule and save 50,000 hours of annual scheduling time which enables senior people to spend more time training younger ones and opens the imagination for new ideas,” added Thom.
Why Ibm And Google May Surpass D-Wave
IBM, Google and others could surpass D-Wave. “Customer growth and recurring revenue remain weak for D-Wave, while peers are landing larger, multi-year contracts and integrating into cloud ecosystems.” according to SeekingAlpha.
“Given limited adoption, relentless dilution, and existential technology risk, I expect QBTS to underperform quantum peers and tech indices over the next 12-24 months,” SeekingAlpha wrote.
Gate-based quantum platforms are surpassing D-Wave’s annealing approach. How so? IBM, Google, and IonQ “are scaling qubit counts and lowering error rates at a pace that is compressing the available headroom for annealing-only systems. IBM’s publicly detailed roadmap targets fault-tolerant machines with thousands of logical qubits by 2029, while Google’s latest Willow chip advances the company’s own million-qubit ambitions later in the decade,” reported SeekingAlpha.
Theoretically, these platforms can do more than annealers. Gate-based platforms can “execute algorithm families such as Shor’s and Grover’s that annealers cannot, opening far larger addressable markets in cryptography, quantum chemistry and machine learning,” added SeekingAlpha.
Meanwhile, D-Wave’s operating losses make the company dependent on selling stock. “Less than two weeks ago the company filed for an additional $400 million shelf registration, signaling that equity issuance will remain a primary liquidity lever,” noted SeekingAlpha.
Does D-Wave’s $12.2 million Jülich contract represent a new wave of even larger deals or is it unlikely to recur?
Investors may wish to consider the possibility of annealing targeting a smaller opportunity. “If the gate-based cohort crosses the million-qubit threshold with effective error correction, annealing risks being crowded out of research budgets and customer mindshare, D-Wave could become a boutique optimization tool rather than a broadly useful platform,” concluded SeekingAlpha.
Mit Sees Bright Future For Quantum Computing
MIT expresses guarded optimism for QC. “People need to understand whether QC is useful for what they want to achieve,” Kiesow said.
“Which issues are you trying to solve? QC can be good at solving complex problems and try to solve them faster. It can do simulations. QC could pose a potential threat to encryption because it can search so many options at once to crack the encryption,” she added.
Moreover, MIT expects hybrid computing systems combining QC and classical computers. “Companies will use a hybrid version with classical and QC for optimization problems,” she said.
While QC could be used to train large language models more efficiently, MIT does not see it being used for consumer-related applications.
“A cloud-like system is the most popular way,” she explained. “QC could be used to speed up large language model training. We are working on QC versions that won’t need super-cooling to make it more efficient and sustainable. Consumer-related services are not the focus of the industry,” she concluded.
Although D-Wave’s price target implies roughly 19% upside, according to TipRanks, I think the company’s second quarter earnings report will reveal whether the company is really on a roll.
If D-Wave’s Q2 report delivers expectations-beating growth and prospects, the shares will keep rising. Otherwise, the company’s stock could keep falling.
In short, it seems too early to identify clear QC winners and losers. Nevertheless, there is growth potential in the industry so perhaps a diversified portfolio of stocks — including IonQ, IBM, and Google — could be a prudent way to bet on that potential.