Needham Is Doubling Down on D-Wave Quantum Stock. Is It Time to Buy?

The market-wide selloff has not spared quantum computing stocks. Prominent names like Rigetti Computing (RGTI), Quantum Computing (QUBT), and IonQ (IONQ) are down by as much as 50% in the year to date. 

For investors looking to scoop up bargains amidst the bloodshed, one quantum computing name in particular stands out. 

About D-Wave Quantum Stock 

Founded in 1999, D-Wave Quantum (QBTS) is a pioneering company in quantum computing, specializing in developing and delivering quantum computing systems, software, and services. It is recognized as the world’s first commercial supplier of quantum computers and is unique in building both annealing and gate-model quantum computers. The company’s market cap currently stands at $2.7 billion.

And unlike its peers, QBTS stock is up 38% on a year-to-date basis. However, its shares are still 7% below their 52-week high. 

Consequently, Needham has reiterated a “Buy” rating on the company with a price target of $8.50 that has already been surpassed. Other firms such as Craig Hallum and Roth Capital have also published bullish notes on D-Wave Quantum. So, what is fuelling the optimism around D-Wave? Let’s have a closer look.

D-Wave Posts Steady Q4 Results 

Like its pure-play quantum computing peers, D-Wave is not yet profitable. However, in its recently reported fourth quarter, D-Wave reported a narrowing of its adjusted net loss. Its revenue also beat estimates. 

The company reported revenue of $2.3 billion. Although this represented a yearly decline of 20.5%, D-Wave managed to maintain a gross margin of 63.8%. Meanwhile, its adjusted losses narrowed to $0.08 per share compared to $0.10 per share in the year-ago period. The company missed the consensus estimate of a loss of $0.06 per share.

Bookings in Q4 made a quantum leap of 502% from the prior year to a record $18.3 million as the total number of customers increased to 135 from 133 over the full year. 

Cash outflow from operating activities also reduced in 2024. Net cash outflow from operating activities was at $42.6 million for 2024, lower than 2023's $60.6 million. Overall, D-Wave significantly increased its cash balance, closing 2024 with $178 million. The cash balance at the end of 2023 was just $41.3 million. 

For the first quarter of 2025, the company is guiding for revenue of over $10 million, considerably topping estimates of $2.55 million.

Key Catalysts

I covered D-Wave in a previous article in which I discussed the company’s first sale of an on-premise quantum computing system to Forschungszentrum Jülich, a leading German national research institution specializing in high-performance computing. Since then the stock has seen a momentous rally of more than 75%.

However, the growth runway for D-Wave is still quite long.

D-Wave specializes in quantum annealing, a technology designed to solve complex problems far more efficiently than traditional computing. Unlike many other quantum computing companies that are still in the research phase, D-Wave stands out by offering systems that already provide tangible, real-world benefits for businesses. Its quantum computing technology is positioned as a practical solution, enabling enterprises to address challenges that were once deemed insurmountable with classical computing methods.

The company provides both cloud-based access to its quantum systems and hardware for research centers. Its offering of Quantum Computing as a Service (QCaaS) is poised for substantial growth, with the market projected to reach $48.3 billion by 2033, representing a remarkable 10-year compound annual growth rate (CAGR) of 35.6%. This positions D-Wave well to capitalize on the expanding demand for quantum computing solutions in industries ranging from logistics and pharmaceuticals to artificial intelligence and materials science.

Overall, D-Wave’s quantum computing technology spans multiple industries, demonstrating its versatility in fields such as logistics, artificial intelligence, materials science, pharmaceuticals, and financial modeling. The company’s client portfolio includes globally recognized corporations like Mastercard (MA), Deloitte, Siemens (SIEGY), and Lockheed Martin (LMT), reinforcing its position as a key player in the quantum computing sector. With such high-profile partnerships, D-Wave continues to establish itself as a leader in advancing quantum solutions for complex, real-world challenges.

Analyst Opinions on QBTS Stock 

Thus, analysts have deemed the stock a “Strong Buy” with a mean target price of $7.67, which has already been surpassed. Out of six analysts covering the stock, five have a “Strong Buy” rating and one has a “Moderate Buy” rating.