Stock of D-Wave Decreases Following Nvidia's Shift in Quantum Skepticism
Rewritten Article:
From Scientific Breakthrough to Profitable Investment: The Quantum Computing Dilemma
Curious about how long it takes to transform a scientific breakthrough into a profitable investment? Quantum computing might be the perfect puzzle piece to solve - but it's been a waiting game for about 66 years and counting. As high-trading quantum computing stocks like IonQ, Rigetti Computing, Quantum Computing, and D-Wave Quantum are showing, traders are betting that the payoff could be anywhere from years to decades away.
When it comes to significant scientific breakthroughs, investors will need patience. Two years ago, I decided to write about generative AI, and my book, "Brain Rush: Dominate the Realm of Generative AI Investing," hit the shelves last July - decades after the failure of an AI startup I'd worked at in the past. In a January 2022 Forbes post, I speculated on why Rigetti Computing's stock jumped so much, predicting it would take a nosedive due to the company's declining revenues, operating losses, excessive valuation, and vulnerability to industry news snippets.
This peaked my interest in writing about quantum computing. However, as I was developing a book proposal, I discovered something missing – a vibrant ecosystem powered by lucrative value for end-users. This seemed to be taking off for generative AI back in 2023, as I wrote "Brain Rush."
In January 2025, Nvidia CEO Jensen Huang stated that quantum computing might be decades away from realizing its economic potential. Just a few weeks later, he had a change of heart - announcing an investment in a Boston-area research center to help Nvidia conquer the challenges hindering quantum computing's potential.
While he works to solve these problems, Palo Alto, Calif-based D-WaveQuantum has already demonstrated that companies will pay for quantum computing services.
Yet investors should proceed with caution when considering whether this technology will deliver greater value for businesses and investors than traditional computing. Wall Street views D-Wave stock as significantly overvalued, and competition from deep-pocketed players like Nvidia and Google could overshadow D-Wave in the race to commercialize quantum computing.
What is Quantum Computing?
Quantum computing replaces classical computing's bits with qubits, which can store a combination of 0 and 1, allowing two qubits to carry four values. This tremendous leap forward is made possible by "exotic metal chilled to about 460 degrees below zero," as detailed in the New York Times.
Britannica reports that American physicist and Nobel laureate Richard Feynman first suggested the concept of quantum computing in 1959, envisioning that when electronic components become small enough, quantum effects—where objects lack defined states—could be harnessed to build more powerful computers.
These quantum effects were first discovered by the pioneers of quantum physics in the early 1900s, including Max Planck, Albert Einstein, Niels Bohr, and Werner Heisenberg, according to the American Museum of Natural History.
Quantum effects were demonstrated by an experiment in which a single photon of light passed through a screen with two small slits, producing a wavelike interference pattern of all available paths. However, when one of the slits was closed to determine which path the photon took, the act of measuring altered the object being measured, as noted by Britannica.
Feynman's idea was realized in 1998 with the creation of a 2-qubit quantum computer constructed by scientists from the Los Alamos National Laboratory, MIT, and University of California – Berkeley. This system, albeit trivial for solving meaningful problems, demonstrated the foundations of quantum computation, according to Britannica.
Is Quantum Computing Ready for its Close-Up?
Since 1998, quantum computing computers have been built with thousands of qubits, and companies that build and operate such systems have gone public. The question remains: Will these quantum computers solve problems meaningful to businesses and consumers in ways that are significantly superior to what traditional computers can accomplish?
At present, quantum computing's challenges significantly overshadow its opportunities.
Quantum Computing's Challenges
Quantum computing faces fierce challenges, including:
- Technical difficulties. Technical obstacles include decoherence—which renders calculations useless—occurring when interactions with the environment disrupt fragile quantum states, and barriers to scalability[2].
- Inaccuracy. Quantum computing currently makes too many errors to be of significant practical use[3].
- High-profile competition. U.S. tech giants like Microsoft, Intel, and IBM are competing with Chinese government programs, each vying for quantum computing dominance[3].
- Cybersecurity threats. By 2030, quantum computing could undermine a crucial cybersecurity algorithm on which much security depends[4].
Quantum Computing's Opportunities
The flip side of all the competition is that big companies might conquer the formidable problems preventing the realization of Feynman's 1959 vision for quantum computing.
Nvidia's Accelerated Quantum Research Center could open a new growth avenue for the chip designer. The lab's goals encompass addressing qubit noise and employing quantum processors to solve "important problems, from drug discovery to materials development,” according to Nvidia's CEO Jensen Huang[3].
Meanwhile, Google has managed to reduce quantum computing's error rate during complex analyses by increasing the number of qubits[3]. Experts claim it's only a matter of time before quantum computing realizes its potential. "People no longer doubt it will be done; the question now is: When?" said Harvard physics professor Mikhail Lukin in the Times.
Where does D-Wave Quantum Stock Head Next?
Nvidia's gamble on quantum computing followed the backlash against Huang's January skepticism. D-Wave was among those taking issue with Huang's statement that practical use of quantum computing was decades away.
D-Wave strongly disapproved of Huang's claim. “It's an egregious error on Mr. Huang’s part,” D-Wave CEO Alan Baratz told Fast Company in January. "We're not decades away from commercial quantum computers. They exist. There are companies that are using our quantum computer today."
Despite having paying customers and recording losses, D-Wave made headlines in March about its “quantum supremacy,” which has sparked controversy. In my opinion, investors should be patient before considering buying the company's stock.
D-Wave's Mixed Financial Results
Although D-Wave's revenue remained constant and recorded larger losses in 2024, the company saw growth in its customer count and bookings. In 2024, D-Wave's revenue was $8.8 million, essentially unchanged, while its net loss nearly doubled to $146 million.
The company added two customers to reach 135 in 2024, and bookings increased 128% to $23.9 million. D-Wave forecasts Q1 2025 revenue to surpass all of 2024's. "We expect first quarter fiscal 2025 revenue to exceed $10 million, including revenue recognized from the sale of an Advantage annealing quantum computer," according to the company release.
However, this revenue boost might be misleading due to the non-recurring nature of the sale[4].
D-Wave's Quantum Supremacy Controversy
D-Wave also staked its claim of quantum supremacy—the notion that its quantum computer outperformed traditional computers on a real-world problem. Based on a paper published in March, D-Wave said it completed magnetic materials simulations "in under 20 minutes with a quantum computer—a task that would have taken nearly a million years on a leading supercomputer at Oak Ridge National Laboratory."[5]
This landmark achievement represents the Holy Grail of quantum computing, claimed Baratz. But academia has already raised questions about these claims[5]. For example, NYU researchers performed similar calculations on a regular laptop, using tensor networks to reduce the amount of data and hence energy needed to perform simulations[5].
The debate continues, with D-Wave senior distinguished scientist Andrew King insisting the claims stand up to scrutiny. Weighing in on the controversy, competitors say D-Wave's advances are overrated[5].
In the eyes of analysts, D-Wave's stock is currently $1.18 too expensive[4]. Although D-Wave has $300 million in cash, the company's lack of growth suggests investors may need to wait for Baratz to dream up a new growth strategy to get D-Wave's stock off the ground.
Enrichment Data:
- Factors behind the commercialization of quantum computing:
- Technological advancements and continuous innovations in quantum error correction, system stability, and scalability
- Investment and infrastructure development, fostering strategic partnerships, and the growth of quantum-as-a-service (QaaS) models
- Government support and collaboration in the form of research grants, public-private partnerships, and education initiatives to cultivate quantum talent
- Real-world applications across sectors like optimization, cryptography, drug discovery, and AI, making quantum computing appealing to various industries
- Cost reductions due to improvements in technology
- Timeline for widespread usage:
- 2020s: Expect significant market growth, with the global quantum market reaching $65 billion by 2030 and the QaaS market reaching $10 billion by the same time
- 2030s: Quantum computing could add over $1 trillion in economic value, with vendors capturing a portion of this through revenue
- 2040s and beyond: By this point, quantum computers might outperform classical supercomputers in most optimization tasks, leading to widespread industrial integration
- Quantum computing startups like IonQ, Rigetti Computing, Quantum Computing, and D-Wave Quantum are seen as potential investments, with traders forecasting payoffs decades away.
- As quantum effects were first discovered by the pioneers of quantum physics in the early 1900s, American physicist Richard Feynman proposed the concept of quantum computing in 1959, envisioning its potential to revolutionize the computing landscape.
- Despite the vast opportunities offered by quantum computing, its commercialization faces considerable challenges, such as technical difficulties, inaccuracy, high-profile competition, and potential cybersecurity threats, making it crucial for investors to exercise caution when considering quantum computing stocks like D-Wave.
