Down 60%, Should You Buy the Dip on D-Wave Quantum?

D-Wave Quantum's (NYSE: QBTS) stock is down by about 60% from the 52-week high it touched in October 2025. That kind of plunge naturally has some investors wondering whether this is a buy-the-dip opportunity or a warning sign.

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The answer to the question, however, is more nuanced. Unlike many of its quantum computing peers, which are research-first and funded by grants, D-Wave is already a revenue-generating business with paying customers, commercial deployments, and a robust balance sheet. However, its lofty valuation and ongoing dilution risk are also too high to ignore.

Against this backdrop, here are a few factors that should make the decision about whether or not to buy this stock easier for investors.

Robust business momentum

D-Wave's core business is in developing computers that make use of a technology called quantum annealing. By the nature of the technology, these machines are not ideal for many types of high-performance computing. Among the things that they are best suited for, however, is solving complex optimization problems, and that category includes a host of tasks that are of interest to businesses, such as increasing the efficiency of manufacturing workflows, routing vehicles, and logistics optimization. While classical computers can handle such problems, their performance deteriorates as complexity increases. D-Wave's systems are usually deployed in hybrid computing systems where classical computers handle most of the tasks while the quantum processor tackles the most computationally difficult optimization steps.

D-Wave generated $21.8 million in revenue in the first nine months of 2025, up nearly 235% year over year. Revenues also doubled year over year in the third quarter, with gross margins above 70%.

D-Wave is progressing from small proof-of-concept projects toward larger commitments. The company's on-premises Advantage system deployment at the Jülich Supercomputing Center in Germany has firmly positioned it within Europe's high-performance computing ecosystem.

D-Wave has signed a 10 million euro multiyear contract with the Italian government and Q-Alliance. In late January, the company also announced a $20 million contract with Florida Atlantic University for the sale of its Advantage2 quantum annealing system, and another $10 million two-year quantum-computing-as-a-service contract with a Fortune 100 company.

D-Wave exited the third quarter of 2025 with a cash balance of $836.2 million. With third-quarter non-GAAP (generally accepted accounting principles) operating expenses of just $23.5 million, the company has a large enough funding cushion to support its research and development and commercialization activities for some time.

Significant risks

D-Wave Quantum is trading at nearly 299 times sales, which is very steep even by the standards of speculative artificial intelligence (AI) stocks or quantum computing stocks. The company is also generating significant losses.

Its recent $550 million acquisition of Quantum Circuits expanded D-Wave's footprint into the gate-model quantum computing space, which is widely viewed as a long-term path to general-purpose quantum computers. Unlike quantum annealing systems, gate-model systems are designed to tackle broader classes of unusually complex problems. As such, developing such a system could unlock a much larger commercial opportunity for the company over time. However, the acquisition also increased D-Wave's execution risks and the likelihood of further shareholder dilution, as a portion of the purchase was funded with newly issued D-Wave stock.

With all that in mind, D-Wave is not an obvious "buy the dip" pick for most growth investors. Its high valuation assumes many years of perfect execution and leaves little margin of error for earnings misses or other challenges.

Long-term investors with high appetites for risk may want to consider taking a small position in this stock. However, these investors might also want to consider waiting for the company's fourth-quarter earnings report on Feb. 26 to see whether it's maintaining its revenue growth pace and keeping expenses under control.

Manali Pradhan, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.