‘The Real Deal in Quantum Computing,’ Says Analyst About D-Wave Stock

D-Wave Quantum (NYSE:QBTS), as its name implies, is part of a new wave of stocks that have been dominating headlines recently – quantum stocks.

Investors have been getting very excited about the potential of quantum computing due to the fact it can perform complex computational tasks at a speed that is completely out of the realm of possibility for regular computers.

D-Wave investors have reaped the benefits of all that excitement, with the stock having soared tenfold between early November and January. But all it took was a comment from Nvidia CEO Jensen Huang that it would be about 15-20 years before quantum computing could be used in any meaningful way to send these hot stocks tumbling down.

Even so, D-Wave shares are now showing signs of recovery, climbing 51% over the past two trading sessions.

Against this backdrop, Benchmark analyst David Williams is dismissing Huang’s cautious stance, firmly arguing that he’s wrong.

“Despite NVDA’s dismissive remarks last week related to quantum’s relevance near-term, quantum is delivering value today and we think is likely well ahead of where most skeptics are willing to admit,” the 5-star analyst said. “While we recognize fully error corrected systems remain some time off, customers are clearly benefiting from these early systems as evidenced by D-Wave applications already deployed and in customer workflows.”

That last bit is essential because Williams’ comments follow in the wake of D-Wave announcing the first commercial sale of its Advantage annealing system. That resulted in the company achieving Q4 bookings of at least $18 million, representing a huge 500% year-over-year increase. The company also said its fiscal year 2024 bookings will probably exceed $23 million, marking a ~120% increase compared to 2023.

“We are highly encouraged by the hardware sale, which we believe represents a major new revenue vector, but equally as important, a validation of accelerating market demand for quantum,” Williams opined.

Additionally, Williams thinks the anticipated signing of the NQI Reauthorization Act will serve as a catalyst for unlocking opportunities for additional on-premises hardware sales to National Labs. Previously, the bill did not acknowledge annealing as a legitimate quantum computing architecture, which excluded D-Wave from participating in the program. However, the updated bill now includes specific language recognizing annealing, allowing funding to be allocated for exploring its potential capabilities.

The company also said it had raised approximately $150 million in cash since the end of Q3 through the utilization of its existing equity facilities, bringing its total cash on hand to $178 million. That is also a vital development that has “eliminated near-term liquidity concerns,” with Williams’ model showing its cash reserves will be enough to sustain operations through at least 2027.

Bottom line, Williams assigns a Buy rating to QBTS shares, with an $8 price target, suggesting ~38% gains over the next 12 months. (To watch Williams’ track record, click here)

None of Williams’ colleagues have a problem with that thesis; QBTS stock claims a Strong Buy consensus rating based on a unanimous 5 Buys. At $6.56, the average price target makes room for one-year returns of ~13%. (See QBTS stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.