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Quantum Showdown: Analyzing D-Wave and IonQ for Investors

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Quantum Showdown: Analyzing D-Wave and IonQ for Investors

Technology, like a freight train, hurtles forward with relentless momentum. As artificial intelligence cements its presence, the realm of quantum computing steps into the limelight, presenting itself as a worthy ally to AI’s voracious appetite for lightning-quick computations. With the quantum computing market estimated to balloon to a colossal $80 billion by the mid-2030s or 2040, the spotlight shines brightly on D-Wave Quantum Inc. (QBTS) and IonQ, Inc. (IONQ), both battling fiercely in this frontier territory that promises to redefine the boundaries of technological innovation.

Let’s delve into the world of quantum computing and dissect these two titans to uncover which one holds the greater promise for investors seeking celestial returns.

D-Wave Quantum: with Eyes Set on the Stars

In the technological arena since 1999, D-Wave Quantum Inc. (QBTS) from the Canadian precinct develops and supplies quantum computing systems, software, and professional services to clientele spreading across the globe. Boasting an arsenal equipped with over 5,000 qubits, D-Wave showcases immense potential for practical applications in the commercial domain. Its current market cap stands valiantly at $311.9 million.

In a soaring display of might, QBTS shares have catapulted a staggering 309% in the past 52 weeks, leaving the S&P 500 Index ($SPX) trailing far behind with its modest 32.1% ascension.

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Priced at a premium of more than 900% against its tech industry peers, D-Wave trades at 36.72 times sales, displaying its bullish stance in the competitive quantum computing realm.

QBTS Charges Ahead with Earnings

In a stellar performance, QBTS’ Q3 revenue skyrocketed by 51.2% year-over-year to hit $2.6 billion, with commercial revenue witnessing a robust 62% surge. The quarter witnessed a remarkable 53% spike in bookings, soaring to $2.9 million. Noteworthy was the exponential growth in average deal size, towering at 172% and 178% for commercial and all customer segments, respectively.

Amidst the relentless march of AI, the insatiable beast guzzling copious amounts of energy, quantum computing emerges as a beacon of hope promising significant reduction in power consumption. D-Wave’s 2000-qubit monolith stands out as a paradigm, being a hundred times more energy-efficient than its conventional peers.

Recently, D-Wave unraveled its “most performant” 1,200+ Qubit Advantage2 prototype on its Leap quantum cloud service platform. Reserved exclusively for Leap subscription clients, this innovation pledges substantial performance enhancements in tackling intricate optimization dilemmas.

As D-Wave readies to unveil its Q4 and fiscal year 2023 earnings report, anticipation buzzes as analysts brace for a predicted revenue surge of over 95% year-over-year to reach $4.70 million. Moreover, the expected loss per share in the fourth quarter is foreseen to dwindle to $0.10, setting the stage for a potential windfall. A buoyant surge of 7.69% in Wednesday’s trading session hints at a tide of optimism swirling around the upcoming earnings announcement.

Favoring QBTS is the unanimous “Strong Buy” rating bestowed by all four covering analysts. However, this harmonious chord strays slightly off-key with a consensus price target of $2.00, slightly undercutting Wednesday’s close by 4.7%.

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IonQ: Rumbling Through the Quantum Cosmos

Nestled in the verdant realms of College Park, Maryland, IonQ, Inc. (IONQ) emerges as a purveyor of general-purpose quantum computing systems on American soil. It spreads its quantum wings, offering access to varied qubit-capacity quantum computers via esteemed cloud platforms like Amazon (AMZN) Web Services (AWS), Amazon Braket, Microsoft’s (MSFT) Azure Quantum, Google’s (GOOGL) Cloud Marketplace, alongside its proprietary cloud service. Additionally, IonQ extends its offerings to encompass hardware development, maintenance, support, and consultation services. The market’s gaze fixates on IonQ, currently commanding a market capitalization of $1.89 billion.

Riding the wave of the public market frenzy, IonQ commenced trading on the New York Stock Exchange on Oct. 1, 2021, carving a historic niche as the world’s first public pure-play quantum computing entity. Garnering a bountiful $600 million via its SPAC listing at a $10.00 per share pricing, IonQ’s meteoric rise peaked with a market cap breaching the $5 billion threshold by the close of 2021. However, the trajectory saw a seismic shift, guiding the stock below its merger valuation as volatility painted an erratic picture on the canvas of the market.

Dancing to its tune, IONQ shares whirled to return an impressive 86.5% over the trailing 52 weeks – a stride that lags behind penny stock QBTS, albeit triumphing over the SPX’s gains.

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Premiumly positioned at a 145.7% valuation over D-Wave, IonQ marks a territory priced at 90.22 times sales, underlining its commanding presence in the competitive quantum landscape.

IonQ: Navigating the Cosmic Chasm

Following a tumultuous journey post-IonQ’s late February earnings revelation, the cosmic tides turned as Q4 revenue thundered past expectations to clock a robust $6.1 million. This propelled the annual revenue trajectory to scale $22 million, signifying a pulsating growth of 98%. The fiscal 2023 sprawled with $65.1 million in new bookings, expanding far beyond the upper echelons of the full-year financial projection.

Forging ahead on the technology innovation front and the establishment of a new R&D and manufacturing hub on the outskirts of Seattle, IonQ’s Q4 net loss expanded to $41.9 million, marking $0.20 per share. The adjourned EBITDA loss stood at $20 million. The path ahead seems dotted with potholes as the company envisions a steeper full-year EBITDA loss of $110.5 million in 2024.

Steering its ship through the turbulent cosmic seas, IonQ wagers revenue predictions for 2024 to oscillate between $37 million and $41 million, with booking estimates spanning the $70 million to $90 million range.

Despite the foreboding cloud of widening losses looming on the horizon, IONQ clinches a consensus “Moderate Buy” rating from the Wall Street oracle. Of the six covering analysts, two sound the trumpet for “Strong Buy,” one echoes “Moderate Buy,” while three counsel “Hold.”

Propelling the quantum ship on an optimistic trajectory, IonQ’s average analyst price target stands at $16.50, spelling an 81.1% upside potential in the forthcoming year. Breathing further vigor into the dreams of investors, the zenith peaks at a Street-high price target of $21 – pointing to a stratospheric surge of 130.5% from present levels.

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Disclosure: The author does not hold any positions in the securities discussed. All information in this article is purely for informational purposes.

The insights and opinions presented are the author’s own and do not necessarily mirror those of Nasdaq, Inc.