D-Wave Quantum Inc. (NYSE: QBTS) saw its stock skyrocket by over 18% following a mixed fourth-quarter 2024 earnings report and a groundbreaking technological announcement. While the company’s revenue of $2.3 million surpassed analyst expectations of $2.2 million, its negative earnings per share of eight cents fell short of the anticipated negative six cents. However, investors were far more focused on D-Wave’s latest quantum computing breakthrough, which set the stage for a potential resurgence in the sector.
Quantum Supremacy: A Game-Changing Moment
A day before releasing its earnings report, D-Wave Quantum announced it had achieved true “quantum supremacy.” This milestone was reached through its Advantage2 system, powered by a quantum annealing chip. The company successfully solved a complex magnetic materials simulation problem within 20 minutes—an equation that, according to D-Wave, would take one of the world’s most powerful supercomputers nearly a million years to compute.
Alan Barrett, CEO of D-Wave, called this a “holy grail for quantum computing,” emphasizing that this was the first true demonstration of quantum supremacy. Barrett also acknowledged the confusion surrounding terms like quantum supremacy, quantum advantage, and quantum utility, clarifying that this achievement represents an unprecedented leap forward for the industry.
Market Reactions and Quantum Stocks Surge
The groundbreaking announcement led to a sharp rally not just for D-Wave but also for other quantum computing stocks. Rigetti Computing (NASDAQ: RGTI) surged by 13%, and IonQ Inc. (NYSE: IONQ) gained around 10% in early trading. However, as the trading session progressed, broader market concerns saw these gains erode, reflecting the ongoing volatility within the tech sector.
This development also serves as a counterpoint to NVIDIA Corp. (NASDAQ: NVDA) CEO Jensen Huang’s remarks in January that practical quantum computing applications were still at least two decades away. The market reaction suggests that investors may be re-evaluating the timeline for quantum computing’s impact on industries such as materials science, cryptography, and artificial intelligence.
D-Wave’s Promising Revenue Projections
Adding to the bullish sentiment, D-Wave Quantum projected an impressive $10 million in revenue for the current quarter—nearly four times its previous quarter’s revenue and surpassing its total 2024 revenue of $8.8 million. A key factor driving this surge is the sale of a D-Wave Advantage quantum computer, marking a significant revenue milestone for the company. However, given the one-time nature of such sales, investors are keen to see sustained, recurring revenue growth over the long term.
More encouragingly, D-Wave reported record bookings of $23.9 million for 2024, marking a 128% increase from the $13.4 million in bookings reported in 2023. With a consolidated cash balance exceeding $300 million, the company appears to be on solid financial footing as it navigates the rapidly evolving quantum computing landscape.
Short Squeeze Potential Adds Fuel to the Rally
One of the factors amplifying the stock’s price surge is its high short interest. Heading into earnings, QBTS stock had a 21% short interest, with short positions increasing by 23% in the past 30 days. This high level of short interest set the stage for a potential short squeeze, forcing bearish traders to cover their positions, further accelerating the stock’s rally.
As quantum computing continues to make strides, D-Wave’s latest achievement positions it as a frontrunner in the field. With strong revenue projections, increased investor confidence, and a promising technology pipeline, the company’s future looks brighter than ever.
