D-WAVE QUANTUM QBTS shares have outperformed the Zacks Computer & Technology sector and its peers International Business Machines IBM and Rigetti Computing RGTI in the year-to-date period.

While QBTS has surged 470.4%, IBM and RGTI have gained 40.6% and 249.2% in the year-to-date period, respectively. The broader sector appreciated 32.3% over the same timeframe.

D-WAVE QUANTUM has also outperformed the Zacks Internet - Software industry, which has returned 39.6% year to date.

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

YTD Performance

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Expanding Portfolio to Boost QBTS Prospects

QBTS’s 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.

Building on this momentum, in the third quarter of 2024, QBTS introduced service-level agreements for Leap quantum cloud service customers, ensuring high availability, reliability, and performance as they transition applications into production.

D-WAVE’s technological advancements have also attracted the attention of national security and civilian agencies. In the third quarter of 2024, the company saw growing interest, highlighted by the U.S. Department of Defense RFI and increased discussions on optimizing public sector services using annealing quantum computing.

Expanding international footprint has also been noteworthy. D-WAVE recently announced that Japan’s largest mobile phone operator, NTT DOCOMO, plans to deploy a hybrid-quantum application using D-Wave technology to optimize mobile network performance and reduce signal congestion.

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.

Strong Partner Base Aids Prospects

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

In July, D-Wave Quantum and Zapata AI expanded their commercial partnerships to accelerate the development of integrated quantum and generative AI solutions in D-Wave’s Leap cloud platform, focusing on improved model training, energy efficiency, and optimized business processes.

In the third quarter, QBTS announced a new collaboration with Japan Tobacco to build a proof-of-concept leveraging quantum computing and AI in the drug discovery process. The aim is to pioneer a new approach to discovering ‘first-in-class’ pharmaceutical small compounds.

In the third quarter, QBTS announced its partnership with Staque to accelerate the commercial adoption of annealing quantum computing across the Middle East. The partnership was unveiled at the Qubits UAE event in Dubai.

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

What Should Investors Do With QBTS Stock?

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

However, challenging macroeconomic uncertainties and intense competition in the rapidly evolving and highly competitive quantum computing market are expected to hurt QBTS’s financial performance.

The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $2.24 million, indicating a decline of 23.16% year over year. 

The consensus mark for earnings is currently pegged at a loss of 9 cents per share, unchanged over the past 30 days. This figure indicates a 10% increase from the year-ago quarter’s reported figure.

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

QBTS stock is not so cheap, as suggested by the Value Score of F.

In terms of the forward 12-month Price/Sales, QBTS is trading at 69.28X, significantly higher than the industry’s 3.16X.

Price/Sales (F12M)

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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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