D-Wave Quantum (QBTS) has surged over 167% year-to-date as it commercializes annealing technology and wins government contracts. However, its high valuation multiples raise questions about whether the company’s fundamentals support the current price. QBTS currently trades at a price-to-sales (P/S) multiple of 182x, which is astronomically higher than the sector average and its own five-year average.
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Yet, it remains cheaper than peers Rigetti Computing (RGTI) and IonQ Inc. (IONQ). Since quantum computing companies are largely loss-making due to heavy R&D, we cannot value them based on the popular price-to-earnings (P/E) ratio.
QBTS Faces Revenue Visibility Issues
D-Wave sells its products in the market, but broad commercialization and adoption remain a challenge and appear years away. Quantum computing revenue tends to be lumpy, driven by a few large contracts, pilots, and government or enterprise collaborations. In such cases, assuming rapid, perpetual growth can overstate upside if bookings come from a few customers or if rollout delays occur.
In Q3FY25, QBTS revenue jumped 100% year-over-year to $3.74 million, with bookings up 3% to $2.4 million. Out of the total revenue, roughly $1.84 million came from a single system upgrade, while the remaining $1.9 million came from QCaaS (quantum computing as a service) and related services. This suggests that current revenue is dominated by a few large, front-loaded deals rather than broad, scalable enterprise adoption at this stage.
Operates in a Niche but Competitive Market
D-Wave operates in a niche quantum-computing market, but competition remains intense due to larger players like IBM (IBM), Alphabet (GOOGL), and Microsoft (MSFT).
While companies are making inroads in annealing technology, D-Wave has signaled that its primary acceleration target is its gate-model program. Quantum annealing targets optimization problems through a continuous evolution toward low-energy states, while gate-model quantum computing performs universal computations via a sequence of discrete quantum gates.
The company flagged a roughly 15% sequential increase in operating expenses, driven mainly by R&D. The initiative is moving from conceptual design to heavy engineering spend focused on control, integration, and system stabilization. Having said that, the gate-model program remains largely pre-performance, with tangible results not yet evident.
Liquidity Remains an Ongoing Concern
D-Wave’s liquidity challenges stem from ongoing losses and heavy funding needs, even as cash reserves cushion near-term obligations. QBTS boasts a solid cash position, with roughly $836 million in cash and short-term investments as of September 30, 2025. However, most of these funds come from warrant exercises. On November 19, D-Wave redeemed all outstanding public warrants, raising an additional $54.6 million. This strengthens cash reserves but increases share count and potential dilution.
To conclude, QBTS stock appears overvalued, given a very high P/S multiple and revenue concentration with limited near-term visibility, despite a strong cash position and recent funding actions.
Is QBTS Stock a Buy, Hold, or Sell?
Despite the high valuation, analysts remain highly optimistic about D-Wave Quantum’s long-term outlook. On TipRanks, QBTS has a Strong Buy consensus rating based on nine unanimous Buy ratings. The average D-Wave Quantum price target of $38.89 implies 71% upside potential from current levels.
