Prediction: This Will Be D-Wave Quantum's Stock Price by the End of 2030

Experts believe it could take years or even decades for commercially viable quantum computers to be useful at scale. But that isn't stopping early movers from trying their luck at the opportunity, despite the high risk of failure for those that attempt to pioneer new technologies.

D-Wave Quantum (NASDAQ: QBTS) is one of the ambitious pure plays in the space. And its rapidly growing business suggests it has already developed something that customers may be willing to pay for. But can its current efforts justify the sky-high valuation of its shares?

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What exactly is quantum computing?

Quantum computing is a technology that many of us have heard about, but that few truly understand. At its core, it aims to bring an entirely new type of tool to bear on extremely complex computational problems. Classical computers (including whatever digital device you're reading this on) store and process data as bits, which can only have two possible values: one or zero. Quantum computers use quantum bits (qubits) that -- thanks to some peculiar but fundamental aspects of physics -- can temporarily have values that are neither one nor zero, but are instead complex probability vectors.

Think of a bit as a coin that has always either landed on heads or tails, and a qubit as a coin that (while it's in the midst of a problem) is spinning through the air. When it's spinning, it's in superposition of both possibilities, and the angles and speed of that spin influence the probability that it will land on one side versus the other.

If all of that sounds radical and head-achingly complex, that's because it is. It's also completely unnecessary for most common computing workloads.

But if quantum computing technology can ever be made to work as hoped, it could be used to rapidly solve types of problems that would take the world's most powerful classical supercomputers years or even eons to solve, and lead to revolutionary advancements in areas like drug discovery, materials science, and logistics, among others.

Where is D-Wave Quantum on this timeline?

Scientists have been working on quantum computing for decades. And the reality is that we still don't know for sure when the technology will deliver on the lofty hopes they have for it. That said, investors have been encouraged by industry leader IBM, which has said it believes it can produce fault-tolerant devices by 2029. For its part, D-Wave Quantum has also begun early commercialization of its own quantum computing devices.

While D-Wave's second-quarter revenue was nearly flat year over year, the company did see a 1,120% jump in bookings for the first half of the year. Bookings refer to the value of client orders that were received during the period, even if they have not yet been fulfilled. That may provide a better view of how D-Wave's business is performing, considering its small scale and the challenges involved in manufacturing and developing its devices. It's also necessary to note that this growth came off an extremely small base. Its actual first-half bookings were just $35.5 million. (Compare that to IBM's Q2 revenue of $17.2 billion.)

D-Wave's flagship product is its Advantage2, a refrigerator-sized machine that is built around an unusual niche technology within the quantum computing realm: quantum annealing. That subset of the technology can be used to find some of the lowest-energy solutions to complex problems. It's important to note that it's quite different from the gate-based quantum computing being pioneered by its rivals, which are aiming for broad-use machines that are analogous to classical computers.

For the foreseeable future, clients will mostly use D-Wave's devices for research rather than full-scale commercial applications.

What will the stock be worth by 2030?

Over the next four years, D-Wave's stock may experience substantial gains at times driven by positive political developments or breakthroughs in the industry as a whole. But as it stands, I believe these are unlikely to lead to sustainable investor returns over the long term.

Right now, the stock trades at a price-to-sales (P/S) multiple of 307 compared to the S&P 500's average of 3.7. In other words, D-Wave Quantum is priced at a highly speculative level. That limits the returns investors can expect, even under a best-case scenario. Meanwhile, investors can anticipate that D-Wave's cash burn and losses will remain high as it strives to maintain a technical edge over much larger, more-established rivals like Alphabet and IBM.

For these reasons, I don't expect the stock to gain any value over the next four years. And shares will probably still be worth around $10.65 by the end of 2030. Investors who are optimistic about quantum technology should probably wait for a better entry point before considering a position in the stock.

Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and International Business Machines. The Motley Fool has a disclosure policy.