D-Wave Gains Another Bull. Why This Analyst Sees ‘Longer-Term Potential’ in Quantum.

Stifel analyst Ruben Roy initiated coverage of D-Wave Quantum with a Buy rating and $26 price target. (COURTESY D-WAVE QUANTUM)

D-Wave Quantum has won the admiration of yet another Wall Street bull.

In a note Monday, Stifel analyst Ruben Roy initiated coverage on D-Wave with a Buy rating and $26 target price. Shares were up 4.4% at $17.94 on Tuesday, with Roy’s target suggesting nearly 45% upside.

D-Wave has nearly three decades of scientific know-how under its belt. The company was founded in 1999, but it went public in August 2022, when began trading on the New York Stock Exchange under the ticker QBTS—a sly nod to qubits, which are the basic units of information in quantum computers.

Roy wrote that he views D-Wave as a “pioneering quantum computing company, and the first to deliver commercial quantum annealing systems”— something that has been an attractive lure for analysts. Last week, Rosenblatt analyst Kevin Garrigan stressed D-Wave’s “first-mover advantage in quantum annealing” as he initiated coverage of the stock at Buy.

Although D-Wave has an extensive roster of commercial clients — a sign the emergent technology is more than just a speculative bet —profitability remains a sticking point for investors.

After an equity raise, D-Wave exited the first quarter of 2025 with $304 million in cash. The company said last month that it had completed a $400 million at-the-market offering, which brought its cash balance to roughly $815 million. Management has asserted that the company is sufficiently funded to reach profitability.

Roy, for one, says that he expects innovation in the next five years to be largely driven by federally-funded research labs and other entities “possess the economic resources and longer-term visions necessary to foster the development of not-yet-profitable quantum compute technologies.”

The timeline for wide-scale deployment of quantum computing remains unclear. Ahead of that breakout moment, investments in the space are accelerating.

“If we go back a year, there was this general understanding that there was a thing called quantum that someday might be important, but not a lot of focus on trying to understand it and leverage it in the near term,” D-Wave CEO Alan Baratz told Barron’s.

He believes several factors are responsible for the sudden explosion of interest, starting with when the United Nations dubbed 2025 the “International Year of Quantum” in June 2024. Subsequent remarks from Nvidia CEO Jensen Huang at the start of the year only drew quantum further further into the public eye.

Roy noted that venture capital inflows into quantum startups have surged in recent years, “reflecting increasing confidence, in our view, on the longer-term potential for the industry.” Stifel believes the quantum computing market is on pace to grow into a $10 billion market by 2030.

It’s more conservative than figures from consulting firm McKinsey, which released its annual report on quantum technology earlier this year. McKinsey predicts that quantum computing alone could be valued anywhere between $28 and $72 billion by 2035, while the broader quantum technology market—including quantum communication and sensing—could swell to $97 billion.

While quantum computing is still in its nascent stage, Roy believes D-Wave’s ability to drive scale through quantum computing as a service lends itself to the company’s “lucrative margin structure.” While D-Wave sells physical systems, most customers opt to purchase quantum computing power through its Leap Quantum Cloud Service.

System sales can have an outsized impact on financial results in a given quarter, accounting for large chunks of revenue or bookings at irregular times. Baratz noted these inconsistencies at the time of D-Wave’s first-quarter earnings report, saying the company was still “in the early stages of commercializing quantum.”

While unpredictable revenue streams are likely to drive share price volatility for now, Roy believes D-Wave is set to benefit from its positioning with the quantum landscape over the long term.

It has been nothing short of a rocky ride for D-Wave. Shares slumped in 2023, while peer stocks moved in the opposite direction. That year, D-Wave sank 39%, while Rigetti Computing rose 35% and IonQ saw momentous gains, soaring 259%.

However, momentum improved into the end of 2024 and continued into 2025. D-Wave stock is up 114% this year, versus a 1.9% decline for IonQ and 4.5% gain for Rigetti Computing.

All 10 analysts polled by FactSet, Roy included, rate D-Wave at Buy.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com