TLDR
- Krish Sankar at TD Cowen launched coverage on D-Wave Quantum (QBTS) with a Buy rating, citing real revenue generation as a competitive advantage
- The firm forecasts D-Wave revenue climbing from $26 million in 2025 to $135 million by 2028, representing 70%+ annual growth
- D-Wave’s Advantage quantum systems sell for $20-40 million each with high margins while Leap cloud services provide recurring revenue
- The company’s Quantum Circuit Inc. acquisition delivers 99.9% fidelity rates and opens potential for AI workloads
- Unanimous Strong Buy rating from all 12 analysts with $41.25 average price target suggesting 110% upside potential
TD Cowen initiated coverage on D-Wave Quantum (QBTS) Thursday with a Buy rating. Analyst Krish Sankar pointed to the company’s commercial revenue as a major advantage over quantum computing rivals.
D-Wave operates differently than most quantum players. The company already books revenue from hardware sales and cloud subscriptions.
Businesses use D-Wave’s quantum computers for practical applications including scheduling optimization and logistics planning. Sankar expects enterprise adoption to accelerate as companies validate quantum use cases.
Aggressive Revenue Growth Path Outlined
TD Cowen projects D-Wave will generate approximately $26 million in revenue during 2025. The forecast calls for revenue reaching $135 million by 2028, implying over 70% compound annual growth.
Revenue comes from two main sources. Enterprise Advantage quantum systems command prices between $20 million and $40 million per unit with strong gross margins.
The Leap quantum cloud service delivers recurring revenue. Companies can access quantum computing capabilities without purchasing dedicated hardware.
Recent performance supports the growth thesis. D-Wave posted 156.2% revenue growth over the trailing twelve months. Gross profit margin reached 82.82%.
Usage data shows expanding adoption. Advantage2 annealing quantum computer usage surged 314% year-over-year. Stride hybrid solver usage climbed 114% over six months.
Technology Acquisition Expands Market Opportunity
D-Wave’s acquisition of Quantum Circuit Inc. technology could speed up processor development timelines. The QCI DRQ technology achieves fidelity rates above 99.9%.
Higher fidelity rates matter for market expansion. The technical improvement allows D-Wave to tackle more complex problem types.
Sankar said the acquisition positions D-Wave to address AI and machine-learning workloads later this decade. The expanded capability increases the company’s total addressable market.
Financial Strength Enables Strategy Execution
D-Wave maintains a robust financial position. The balance sheet shows more cash than debt with a current ratio of 54.68.
The company carries minimal leverage with a debt-to-equity ratio of 0.06. This financial flexibility supports acquisition activity and accelerated product development.
D-Wave recently secured a $10 million, two-year Quantum Computing as a Service contract with a Fortune 100 company. The agreement covers development and deployment of multiple quantum applications.
The company is relocating headquarters from Palo Alto to Boca Raton Innovation Campus in Florida by 2026. Florida Atlantic University pledged $20 million to acquire an Advantage2 annealing quantum computer for installation at its campus.
Wall Street shows strong conviction on the stock. All 12 analysts covering D-Wave rate it a Strong Buy with no Hold or Sell ratings.
The consensus price target of $41.25 implies 110% upside from current levels. The stock trades at a $7.26 billion market cap and delivered 225.17% returns over the past year.
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