D-Wave CEO says recent tech breakthrough is bolstering its sales momentum

D-Wave Quantum is one of the best-performing stocks listed across all US exchanges on Thursday, soaring over 50% at its peak after an impressive set of first-quarter results in which more quarterly revenues were generated than all of 2024.

(The Tradr 2x Long QBTS Daily ETF is performing like the name suggests, more than doubling on the day.)

We sat down with CEO Dr. Alan Baratz to discuss the company’s rising pipeline of potential new buyers for systems (which drove this quarter’s huge jump in revenues), how the firm is navigating a world of uncertain tariffs and rising recession risks, and how D-Wave’s opportunity set is expanding beyond solving business optimization problems to AI and the blockchain.

Below are lightly edited responses from Baratz on D-Wave’s operations and business prospects. All emphasis added.

On how the three potential systems sales highlighted in the March Q4 earnings call are progressing:

 I think that I indicated when we last spoke that those three were in the very early stages, and these are long timeline sales opportunities, so it was going to take a while for them to mature. What I can tell you is that those three are all progressing nicely, one of them actually quite nicely. Although, nothing to report at this time. And then we have added a couple of others, so we are making progress.  The fact that the supremacy result has really generated a lot of interest among the supercomputing centers, combined with the fact that Julich was the first to take the plunge and actually purchased a system, has generated some very real interest from other supercomputing centers and national labs in acquiring systems.

On D-Wave’s supply chain risk from tariffs:

 The answer is low to nothing.  Most of the technology that we use to build our systems is either commodity if acquired externally, or developed internally by our own R&D. So the parts we acquire externally are essentially commodity. Now, let’s take China for example. We do have some parts in our system that are sourced from China.

They are low-tech things like connectors and frankly represent less than 10% of the cost of the system. So even if we had to pay 2x, 3x, 4x for those parts, it really would not significantly impact us. So it’s just not an issue.

On if there’s any sign of potential customers pulling back in light of concerns about the macroeconomic environment:

No impact at all, but let me explain why. We are actually seeing now more, larger companies with more complex applications wanting to do larger deals with us. Now, that’s driven primarily by the supremacy work that has caught the attention of a lot of companies, namely the fact that we are able to deliver real computational capability that you cannot get classically — so the supremacy result combined with customer references and the fact that we have already been able to deliver value to a number of different companies. Quite the opposite of seeing challenges, we are actually seeing a growing pipeline of better opportunities.

But perhaps the other reason why this is the case is you talking about CapEx going down due to uncertainty. When we sell professional services and quantum compute as a service, it’s OpEx, not CapEx. Now, when we sell systems, that is CapEx, but that’s more sold to supercomputing centers and government labs that don’t have the same kind of issues that commercial may be having right now.

On D-Wave’s total addressable market:

 Optimization is a huge market opportunity. IDC put the market for quantum at about $8 billion to $9 billion in roughly three years, and they also said that they think optimization is the killer app for quantum computing. So there’s a a huge market opportunity for us just in the optimization space, and we’re the only ones that can go after that today.

But we’ve also started talking about some new application areas that are enabled as a result of the supremacy work; for example, blockchain. We built a hashing function based on the computation that we use in our quantum supremacy result, which enables a much more energy efficient proof of work for blockchain and cryptocurrency.

Now, we are not blockchain or cryptocurrency experts. So we are looking for partners who are experts in the area who are interested in leveraging that technology, and we have already engaged with a few that have come to us with an interest in leveraging this technology. That’s a whole new market opportunity area for us that isn’t at all baked into any of our thinking about the growth of the business.

The second is AI. We’re doing some very interesting work in how you can use the quantum computer together with classical to do AI model training and inference faster and with less electricity consumption. And we think that could also be a significant market for us.

What’s interesting about those two, blockchain and AI, is that unlike optimization, where it’s really quantum compute as a service — because all these businesses care about is “run my application” — in those cases, they need systems. So those are system sales opportunities.