D-WAVE QUANTUM QBTS shares are currently overvalued, as suggested by its Value Score of F. 

In terms of the forward 12-month price/sales (P/S), QBTS is trading at 90.31X, significantly higher than its median of 14.26X and the Zacks Computer and Technology sector’s 6.49X.

Price/Sales (F12M)

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QBTS shares have surged 554.8% in the trailing six months compared with the broader Zacks Computer and Technology sector’s return of 13.7% and Internet - Software industry’s appreciation of 38.7%.

QBTS Shares Beats Sector, Industry

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QBTS has outperformed its peers, including International Business Machines IBM and Alphabet GOOGL. These companies are also making strong efforts in the quantum computing space. IBM and GOOGL gained 33.2% and 14.2% in the trailing six-month period, respectively. 

QBTS’ outperformance can be attributed to its expanding clientele and growing influence in the quantum computing space.

With an impressive share price performance but at such a high valuation, how should investors approach QBTS stock? Let’s investigate.

QBTS Benefits From Expanding Quantum Computing Market

QBTS’ expanding portfolio in the quantum computing space has been a key catalyst. Quantum Computing-as-a-Service revenues grew 41% year over year, totaling $1.6 million in the third quarter of 2024. This was largely driven by a higher average revenue per customer, reflecting increasing demand for D-Wave’s cloud-based quantum computing services.

In January, D-Wave Quantum further expanded its portfolio by launching the Leap Quantum LaunchPad program, offering a three-month free trial of its annealing quantum computing technology. The initiative aims to accelerate quantum application deployment by providing access to 5,000+ qubit systems, cloud services, and expert guidance.

QBTS’ commitment to maintaining high service standards and ensuring the security of customer data has been noteworthy. In December 2024, QBTS completed its second SOC 2 Type 2 audit, reaffirming its commitment to customer data security and protection while enhancing its service offerings, including tailored SLAs for the Leap quantum cloud service to support commercial-grade quantum and hybrid-quantum applications.

As the quantum computing market continues to evolve, QBTS is poised to benefit from its growth. 

Per a Grand View Research report, the global quantum computing market is expected to witness a CAGR of 20.1% from 2024 to 2030.

QBTS’ Strong Partner Base Aids Prospects

QBTS’ partnerships with Carahsoft, Zapata Computing Holdings, Japan Tobacco and Staque have been major growth drivers for its success.

In January, QBTS partnered with Carahsoft Technology to bring quantum computing technologies to the Public Sector. This collaboration enables government agencies and national labs to access D-Wave’s quantum solutions via Carahsoft’s extensive reseller network and procurement contracts.

D-Wave continues to broaden its customer base, which includes 132 customers across commercial, government and research sectors. The company saw a 66% increase in revenues from government customers and a 47% increase in its top line from research customers in the third quarter of 2024. This highlights the growing demand and recognition of quantum computing solutions across multiple industries and sectors.

Earnings Estimates for QBTS Show Upward Trend

D-WAVE’s expanding portfolio in the quantum computing space and expanding customer base are expected to benefit the company’s top-line growth.

The Zacks Consensus Estimate for 2025 revenues is currently pegged at $15.42 million, indicating an increase of 76.22% year over year. 

The consensus mark for loss is currently pegged at 38 cents per share, unchanged over the past 30 days. QBTS incurred a loss of 41 cents per share in the year-ago quarter.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

QBTS Faces Growing Pressure From Rising Quantum Competitors

Despite expanding its portfolio and customer base, QBTS faces significant challenges from macroeconomic uncertainties and fierce competition in the rapidly evolving quantum computing market.

Competitors like Rigetti Computing RGTI, along with major players such as IBM, Google and IonQ, are intensifying market pressures with its advancements in quantum computing technologies, potentially impacting QBTS’ financial performance.

In December 2024, RGTI launched its 84-qubit Ankaa-3 quantum computing system, featuring significant hardware enhancements and major two-qubit gate fidelity milestones. This system offers superior performance for algorithmic research. This move by Rigetti further bolsters its market position, potentially challenging QBTS’ performance as the market shifts toward more advanced quantum solutions.

This shift in market dynamics is further highlighted by Meta Platforms CEO Mark Zuckerberg’s skepticism. During a Joe Rogan podcast, Zuckerberg expressed doubts about the near-term utility of quantum computing. His viewpoint aligns with NVIDIA CEO Jensen Huang’s assertion that practical quantum computers are decades away.

This perspective from influential tech leaders underscores the market’s uncertainty, making it even more challenging for QBTS to navigate the evolving landscape of quantum computing.

Conclusion

Stretched valuation, along with stiff competition, is expected to drag down QBTS shares in the near term.

QBTS currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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International Business Machines Corporation (IBM) : Free Stock Analysis Report

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D-Wave Quantum Inc. (QBTS) : Free Stock Analysis Report

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