Why D-Wave's Project With Davidson Is a Game-Changer For Quantum

Key Points

• D-Wave's physical quantum computer, deployed in partnership with Davidson Technologies in Alabama, marks another milestone development for the popular quantum firm.
• This computer has many potential applications, as it is designed for use by the defense industry.
• Still, concerns remain about D-Wave's lofty valuation and the benefits of annealing technology more broadly.

Down about 8% in the last month, quantum computing firm D-Wave Quantum Inc. NYSE: QBTS is a leader in an industry hit hard by the escalating trade war between the United States and China. While the recent slump may present an opportunity for investors to buy this quantum industry standout, there are now two schools of thought surrounding QBTS shares.

On one hand, a recent report by short-seller Kerrisdale Capital suggests that D-Wave's annealing technology, its quantum supremacy achievement from earlier in the year, and other attainments the company has promoted are less commercially viable than investors may think. On the other hand, though, bullish investors might point to the firm's aggressive approach to getting products to market, including its Leap Quantum LaunchPad program started earlier in the year, as evidence that its tools have marketable applications.

In late April, D-Wave completed a key project in partnership with defense technology consultancy Davidson Technologies. This project may have the potential to drive D-Wave's marketability further as the company solidifies its value to the defense industry.

Physical Assembly of Annealing System

D-Wave's project with Davidson involved the physical assembly of a D-Wave Advantage2 annealing quantum system, which has been available through the company's Leap cloud service since February 2024. This latest effort is the first-ever physical annealing quantum computer built on-premises in the state of Alabama.

Developing a physical assembly is important in this case because the project aims to support secure quantum research in national defense use cases. In this case, the partnership with Davidson is crucial, as the annealing quantum computer is housed at that company's headquarters, and Davidson will provide essential internal R&D and workforce development to deploy the computer.

Impacts for D-Wave and the Quantum Industry

Once the computer is calibrated and operationalized, it can be used to conduct collaborative research with defense agencies, academic institutions, and government labs, among other partners. The company aims to make the computer an essential tool for the U.S. Department of Defense.

With many quantum computing firms developing standalone technology that is not necessarily optimized for practical use across industries at this point, the potential success of D-Wave's latest computer in real-world defense applications could be transformational. The potential use cases for the annealing computer in defense include space operations, missile systems, and optimized logistics, among many others.

Pushback on Annealing Tech

Kerrisdale and others have pushed back on D-Wave's focus on annealing technology, suggesting that its benefits over classical computing strategies may not be confirmed. Notably, the company has only recently entered the innovation race to develop alternative quantum computing technologies like gate-model systems. Some analysts view this latter technology as more likely to have real-world marketability than annealing systems.

In a sense, D-Wave's physical annealing computer in Alabama provides the company an opportunity to demonstrate just that—the real-world usefulness (in this case, in the defense space) of annealing quantum. Once the machine is operationalized, investors interested in D-Wave's future should watch closely. If it becomes clear that this computer has tangible benefits for the defense industry—ideally ones that can lead to additional contracts or other revenue-generating actions—it becomes a significant piece of evidence in favor of D-Wave's technological approach.

Is Now the Time to Buy D-Wave?

On the heels of D-Wave's project with Davidson, investors may be wondering if now is the best time to invest in this stock.

Shares of QBTS have traded horizontally throughout most of April, though they are down about 27% year-to-date due to a brief decline early in the year and another in March.

With a price-to-sales ratio of more than 230, D-Wave could hardly be called a value play. Indeed, the company has received criticism for being overvalued relative to its fundamentals. 2025's price movement helps to make it a more attractive venture in this regard.

Still, many investors are likely to find the stock too costly, particularly given D-Wave's historical difficulty securing consistent revenue. However, should the Davidson project provide a clearer pathway to profitability, this latest development could give investors something concrete to focus on.