D-Wave Quantum specializes in quantum annealing systems focused on optimization tasks.
The company’s valuation profile is reminiscent of the darlings of the dot-com boom.
History suggests that D-Wave stock may be headed for a sharp correction.
10 stocks we like better than D-Wave Quantum ›
For the past three years, growth investors have been chasing just about anything that touches semiconductors, data centers, or cloud computing. The reason, of course, is due to the proliferation of generative artificial intelligence (AI) in all aspects of the technology value chain.
But in 2025, a new pocket of the AI realm has made its debut at the center — and investors are very enthusiastic. Some of the top performing AI stocks last year were quantum computing developers. In particular, pure plays like Throw away the Computer and IonQ burst onto the scene as speculative leaders of the quantum AI arena.
However, another player surpassed his cohort: Enter D-Wave Quantum(NYSE: QBTS)whose shares increased by 211% in 2025, thus beating the S&P 500, Nasdaq Compositeand all stocks of the “Magnificent Seven”.
As D-Wave stock fires on all cylinders, smart investors are surely wondering if the company can keep rallying. Let’s take a look at what drove D-Wave’s meteoric rise last year and look at the company’s underlying valuation trends to assess where the stock may be headed in 2026.
D-Wave designs quantum computers that use annealing technology — a method that exploits superconducting qubits. In simple terms, quantum annealing systems allow qubits to naturally converge to their lowest energy state.
This approach is useful in optimization-based tasks that require the analysis of multiple results for the same application. Today, D-Wave’s systems are currently tested in environments such as supply chain management, scheduling, manufacturing and logistics, and portfolio optimization.
Image source: Getty Images.
Last year the S&P 500 gained roughly 16%, marking the third consecutive year the index generated double-digit gains. According to an analysis published by Fisher Investments, sectors that outperformed the broader stock market last year include communications services, financials, materials, industrials, utilities, and of course, technology.
One of the things that makes the investment in D-Wave interesting is that the applications of quantum computing are believed to be so broad, the company theoretically has the ability to benefit from increasing investment in each of the above key industries. Therefore, speculative investors are pouring capital into D-Wave ahead of its next potential breakout.
While these prospects make the momentum behind D-Wave tempting, is it really a smart idea?
With a share price of $28, D-Wave stock may seem dirt cheap. But smart investors understand that there is more to a company’s valuation profile than its underlying stock price.
QBTS PS Data Ratio by YCharts
Over the past year, the rise in D-Wave stock has fueled strong levels of valuation expansion. As of this writing (Jan. 14), D-Wave boasts a price-to-sales ratio (P/S) of 342. Let’s take a look at how that stacks up to other previously seen megatrends in the stock market.
The AI revolution has drawn many comparisons to the dot-com bubble of the late 1990s and early 2000s. During the early days of the internet, investors were paying absurd premiums for companies that had very little — and in some cases virtually zero — sales or profits.
In other words, investors bought more into a narrative about how the internet was going to change the world rather than understanding which companies were really in a position to benefit from an online ecosystem.
One of the most notable victims of the dot-com era was Cisco Systems. Cisco was the ultimate pick-and-shovel player of the internet revolution. Every time a new website was created or a data center was built, Cisco routers and networking devices were in demand.
As we now know, many companies that were hoping to capitalize on the rise of the internet were forced to curb their capital expenditures (capex) as their business ideas failed to gain traction. This decline in infrastructure was a direct headwind for companies like Cisco — which saw its market cap fall to 89% after the dot-com bubble.
CSCO Market Cap data from YCharts
Given that D-Wave has nowhere near the influence that Cisco once had, I’m predicting that the company could follow an even sharper reversal. By the end of this year, I think investors will have woken up to the fact that quantum computing remains primarily an exploratory technology for now – lacking critical commercial scale or enterprise adoption.
By December 2026, I think D-Wave Quantum will have turned into a falling knife and may be trading at penny stock levels.
Before you buy stock in D-Wave Quantum, consider this:
the Motley Fool Stock Advisor a team of analysts has identified only what they believe they are 10 best stocks for investors to buy now… and D-Wave Quantum was not one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Netflix I made this list on December 17, 2004… if you invested $1,000 at the time of our recommendation, you would have $474,578!* Or when Nvidia I made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you would have $1,141,628!*
Now, it is worth noting Stock consultant total average income is 955% — a market-crushing outperformance compared to 196% for the S&P 500. Don’t miss the latest top 10 list, available with Stock Advisorand join an investment community built by individual investors for individual investors.
See the 10 stocks »
*The Stock Advisor returns from January 18, 2026.
Adam Spatacco has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Cisco Systems and IonQ. The Motley Fool has a disclosure policy.
Prediction: D-Wave Quantum Stock Will Be Worth This Much by Year-End 2026 was originally published by The Motley Fool
