Is D-Wave Quantum Your Ticket to Becoming a Millionaire?

D-Wave Quantum (NYSE: QBTS) is one of the more popular quantum computing stocks on the market. However, it's quite small at a $10 billion market cap. But that small size is exactly why some investors are drawn to it.

A smaller company can grow more easily, especially in a field like quantum computing that could be massive one day. However, quantum computing is no surefire bet, and there's a lot of risk involved because the competition is so heavy. But if D-Wave Quantum succeeds, is it your ticket to becoming a millionaire?

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D-Wave isn't your typical quantum computing player

Quantum computing isn't an easy technology to understand. Its main improvement over traditional computing is that it uses qubits versus bits. Qubits allow a near-infinite number of paths to be taken by a calculation, while bits only allow two directions, a 0 or a 1. This makes quantum computing fantastic for solving problems where one issue branches off into another. Applications like logistics networks, artificial intelligence, and weather pattern modeling are excellent examples of quantum computing deployment.

However, understanding which company is leading isn't an easy topic. So, some investors turn toward governing agencies to see which products are being used. One is DARPA (Defense Advanced Research Projects Agency), which is essentially the program that develops emerging technologies for the U.S. military for all branches. DARPA has already reached phase B selections, which eliminated some well-known competitors like Rigetti Computing. However, it also didn't include D-Wave Quantum.

In fact, D-Wave didn't even apply for this project at all. Getting a huge contract with the U.S. military is a big deal. It puts the winner on the fast track to be deployed by other companies, because its technology has already been vetted. So, why didn't D-Wave apply? It all has to do with how it's approaching quantum computing.

Unlike many of its peers, D-Wave isn't pursuing a general-purpose quantum computing model. Instead, it's focusing on quantum annealing technology, which finds the lowest energy state in a system, representing the optimized answer. That's not what the U.S. military is looking for, so D-Wave didn't bother with entering the competition. Instead, it's pursuing areas where its technology would excel, like manufacturing logistics, AI training, and other areas where optimization is key.

D-Wave is already working with several world-class manufacturers, like Volkswagen and Toyota, to implement a hybrid quantum computing solution to improve how it operates. It's also working in AI, where it's seeing improved efficiency and shorter response times. These are potentially massive areas for D-Wave Quantum, and if it can solve some of these problems, its stock could make investors a nice chunk of change. But is it enough to make you a millionaire?

It will be difficult for D-Wave to produce millionaire-maker returns

If you invest $999,000 into D-Wave, you could be a millionaire today or tomorrow, but that's not the point. Investors are looking for huge returns, and something along the lines of 100x returns is normally set as the threshold for whether a stock can deliver millionaire-maker returns.

With D-Wave's market cap already at $10 billion, that would require it to be a $1 trillion company to deliver that level of returns. I'm a bit skeptical about whether that's possible, because a company like Taiwan Semiconductor Manufacturing, valued at $1.7 trillion, generates about $115 billion in revenue annually. For reference, McKinsey & Company believes that the total annual quantum computing market could be worth between $28 billion and $72 billion by 2035.

So, the quantum computing market would need to reach the high end, and D-Wave would have to capture nearly every penny in the market. With it pursuing a more nuanced quantum computing approach versus a broader one, I'm a bit skeptical that D-Wave can produce the results investors want. As a result, I don't think D-Wave Quantum can make you a millionaire on its own. However, if it succeeds, I have no doubt that it will provide outstanding stock returns.

Keithen Drury has positions in Taiwan Semiconductor Manufacturing. The Motley Fool has positions in and recommends Taiwan Semiconductor Manufacturing. The Motley Fool recommends Volkswagen Ag. The Motley Fool has a disclosure policy.