QBTS Stock Set to Report Q4 Earnings: A Smart Buy or Risky Investment?

D-WAVE QUANTUM QBTS is set to report fourth-quarter 2024 results on March 13.Find the latest EPS estimates and surprises on Zacks Earnings Calendar.The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $2.24 million, indicating a decline of 23.16% year over year. The consensus mark for loss is currently pegged at 9 cents per share, unchanged over the past 30 days. QBTS reported a loss of 10 cents per share in the year-ago quarter.D-Wave Quantum Inc. Price and EPS Surprise D-Wave Quantum Inc. price-eps-surprise | D-Wave Quantum Inc. QuoteQBTS earnings were in line with the Zacks Consensus Estimate in each of the trailing two quarters while missing it twice, with a negative average surprise of 11.88%.Let’s see how things have shaped up prior to this announcement.Key Factors to Note for QBTS Q4 EarningsD-Wave Quantum is expected to have benefited from the strength of its quantum computing solutions. Accelerating the adoption of quantum among commercial customers is expected to bode well for its fourth-quarter 2024 results.Despite a decrease in bookings in the third quarter of 2024, the company expects fourth-quarter bookings to improve sequentially. This improvement is likely to be due to the increasing demand for D-Wave’s quantum computing services and the expansion of its customer base across the commercial, government, and research sectors.D-Wave Quantum continues to broaden its customer base, which includes 132 customers across the commercial, government and research sectors. The company saw a 66% increase in revenues from government customers and a 47% increase in its top line from research customers in the third quarter of 2024. This highlights the growing demand and recognition of quantum computing solutions across multiple industries and sectors. The company’s product advancements, such as the completion of the 4,400-qubit Advantage 2 processor, are expected to have driven more customer interest and the adoption of its technology in the to-be-reported quarter, leading to increased usage of its quantum computing systems.With key clients like NTT DOCOMO moving into production with quantum applications, D-Wave Quantum is poised to see continued adoption of its quantum annealing solutions. This is likely to result in increased revenues and customer engagement in the fourth quarter of 2024.QBTS Shares Outperformed Industry, SectorsQBTS shares have surged 124% in the trailing 12 months compared with the broader Zacks Computer and Technology sector’s return of 5.5% and Internet - Software industry’s appreciation of 5.7%.One Year PerformanceImage Source: Zacks Investment ResearchQBTS has outperformed its peers, including International Business Machines IBM and Alphabet GOOGL. These companies are also making strong efforts in the quantum computing space. IBM and GOOGL gained 29.9% and 19.8% in the trailing 12-month period, respectively.QBTS Stock Trading at a PremiumD-WAVE QUANTUM shares are currently overvalued, as suggested by its Value Score of F. In terms of the forward 12-month price/sales (P/S), QBTS is trading at 66.8X, significantly higher than its median of 12.10X and the Zacks Computer and Technology sector’s 5.70X.Price/Sales (F12M)Image Source: Zacks Investment ResearchQBTS’ Strong Partner Base Aids ProspectsQBTS’ partnerships with Carahsoft, Zapata Computing Holdings, Japan Tobacco and Staque are likely to have driven growth during the fourth quarter.In February 2025, QBTS and Staque introduced a commercial hybrid-quantum application that optimizes the movements of autonomous agriculture vehicles, marking a significant advancement in quantum-powered agricultural optimization. Benefits from this partnership are likely to have been reflected in the to-be-reported quarter’s performance.QBTS Faces Growing Pressure From Rising Quantum CompetitorsDespite expanding its portfolio and customer base, QBTS faces significant challenges from macroeconomic uncertainties and fierce competition in the rapidly evolving quantum computing market.Competitors like Rigetti Computing RGTI, along with major players such as IBM, Google and IonQ, are intensifying market pressures with its advancements in quantum computing technologies, potentially impacting QBTS’ financial performance.In December 2024, RGTI launched its 84-qubit Ankaa-3 quantum computing system, featuring significant hardware enhancements and major two-qubit gate fidelity milestones. This system offers superior performance for algorithmic research. This move by Rigetti further bolsters its market position, potentially challenging QBTS’ performance as the market shifts toward more advanced quantum solutions.This shift in market dynamics is further highlighted by Meta Platforms CEO Mark Zuckerberg’s skepticism. During a Joe Rogan podcast, Zuckerberg expressed doubts about the near-term utility of quantum computing. His viewpoint aligns with NVIDIA CEO Jensen Huang’s assertion that practical quantum computers are decades away.This perspective from influential tech leaders underscores the market’s uncertainty, making it even more challenging for QBTS to navigate the evolving landscape of quantum computing.ConclusionStretched valuation, along with stiff competition, is expected to drag down QBTS shares in the near term.QBTS currently has a Zacks Rank #3 (Hold), suggesting that it may be wise to wait for a more favorable entry point to accumulate the stock. 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Click to get this free report International Business Machines Corporation (IBM): Free Stock Analysis Report Alphabet Inc. (GOOGL): Free Stock Analysis Report Rigetti Computing, Inc. (RGTI): Free Stock Analysis Report D-Wave Quantum Inc. (QBTS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks