We recently published 10 Stocks Shining Bright Amid Wall Street’s Dull Spell. D-Wave Quantum Inc. (NYSE:QBTS) is one of the top performers on Tuesday. D-Wave Quantum bounced back on Tuesday from two straight days of losses, jumping 7.50 percent to finish at $25.52 apiece as investors took heart from an investment firm’s bullish stance for the stock. In a market report, Jefferies issued a “buy” recommendation on shares of D-Wave Quantum Inc. (NYSE:QBTS), alongside a price target of $45. The figure marked ...

Industry Overview - The quantum computing industry is currently generating $1 billion in revenue, with projections indicating potential growth to $198 billion by 2040 according to Jefferies [1][2] - Mizuho Securities also predicts significant growth in the quantum computing sector, estimating the market could reach $205 billion by 2035, likening it to the early GPU era [4] Company Ratings - Jefferies has initiated coverage on three companies in the quantum industry: D-Wave Quantum (NYSE:QBTS) and IonQ (NYSE:IONQ) both rated as Buy, and Rigetti Computing (NASDAQ:RGTI) rated as Hold [3] - The industry is supported by investments from governments and major tech companies, including Alphabet Inc. and IBM [3] Financial Performance - D-Wave Quantum reported Q3 results showing 100% revenue growth to $3.8 million, with a GAAP gross profit increase of 156% to $2.7 million and a gross margin of 71.4% [6] - IonQ reported Q4 revenue of $39.9 million, exceeding analyst estimates by 47.8%, and raised its full-year 2025 revenue guidance to $106–110 million, surpassing previous estimates [6] Stock Performance - Year-to-date, D-Wave Quantum's stock surged by 165.56%, while IonQ's stock increased by 15.24% [7]

Core Insights - The article discusses the valuation challenges faced by early-stage businesses, particularly in the quantum computing sector, highlighting the limitations of traditional metrics like P/E and PEG ratios for companies operating at a loss [1][2][3] Group 1: Valuation Metrics - The price-to-sales (P/S) ratio is introduced as a more suitable metric for valuing early-stage companies that lack positive earnings per share (EPS) [1] - Traditional valuation methods like P/E and PEG ratios are effective for mature businesses but fall short for those in early commercialization stages [2] - Historical data indicates that P/S ratios above 30 are unsustainable over time, as seen during the dot-com bubble [7] Group 2: Quantum Computing Market - Quantum computing stocks have experienced significant price increases, with IonQ, Rigetti, D-Wave, and Quantum Computing Inc. seeing gains of 68%, 333%, 568%, and 89% respectively over the past year [5] - The potential economic value of quantum computing is estimated to reach up to $1 trillion by 2035, with varying forecasts suggesting $450 billion to $850 billion by 2040 [4][6] - Current P/S ratios for quantum computing companies are indicative of their early stage in the commercialization process, with IonQ at 156, Rigetti at 992, D-Wave at 315, and Quantum Computing Inc. at 3,144 [11] Group 3: Future Outlook - The article suggests that 2026 may pose significant challenges for quantum computing stocks, as high P/S ratios indicate a potential bubble [10] - Historical trends show that emerging technologies often require time to mature, and quantum computing may be following a similar trajectory [13][16] - While some quantum computing stocks may succeed in the long term, expecting continued rapid growth without mainstream commercialization is deemed unrealistic [18]

Group 1: Quantum Computing Market - The global quantum computing market is projected to grow from $1.6 billion in 2025 to $7.3 billion by 2030, indicating a compound annual growth rate of 34.6% over the next five years [2] - Analysts at Jefferies predict that D-Wave Quantum (NASDAQ: QBTS) could see a price surge of 90% by 2026, supported by roadmap execution, commercial traction, and technical proof points [3] - Mizuho analysts estimate that D-Wave Quantum accounts for approximately 20% of the total quantum computing market, with a price target of $46 for QBTS stock [4] Group 2: Roku Inc. - Roku (NASDAQ: ROKU) has been upgraded to an overweight rating with a price target of $135 by Morgan Stanley, citing potential for sustained double-digit platform revenue growth [5] - Jefferies also upgraded Roku to a buy rating, highlighting it as a strong revision story in the Internet sector heading into 2026, with an expected 20% upside potential [6] - Technical analysis suggests that if Roku can break above the double top resistance at around $116.66, it could potentially retest $150 per share [8]

Core Viewpoint - Quantum computing stocks in the U.S. experienced a collective rise on Tuesday, indicating positive market sentiment towards the sector [1] Group 1: Stock Performance - IonQ Inc (IONQ.US) saw an increase of over 4% [1] - D-Wave Quantum (QBTS.US) rose by more than 2.9% [1] - SEALSQ Corp (LAES.US) increased by over 3% [1] - Quantum Computing (QUBT.US) experienced a rise of more than 2% [1]

Core Insights - The individual has retired after over 43 years in investment research, now operating independently to provide actionable investment insights [1] - The focus is on rules/factor-based equity investing strategies, emphasizing the use of numbers to inspire human intelligence-driven investment stories rather than serving the numbers themselves [1] - A combination of factor analysis and classic fundamental analysis is employed to understand the true story of a company and its stock, with an emphasis on future potential rather than past performance [1] Background and Experience - The individual has extensive experience covering a wide range of stocks, including large cap, small cap, micro cap, value, growth, and income [1] - Previous roles include managing a high-yield fixed-income fund and conducting research on quantitative asset allocation strategies, contributing to the development of Robo Advising [1] - The individual has authored two books on stock selection and analysis and has a passion for investor education, having conducted numerous seminars [1]

Core Viewpoint - The article summarizes significant analyst rating changes that are expected to impact the market, highlighting both upgrades and downgrades across various companies and sectors [1][6]. Upgraded Ratings - Roku (ROKU): Morgan Stanley upgraded the rating from "Underweight" to "Overweight," raising the target price from $85 to $135, citing strong performance in the digital advertising market and expected robust growth in U.S. advertising spending by 2026 [5]. - Okta (OKTA): Jefferies upgraded the rating from "Hold" to "Buy," increasing the target price from $90 to $125, noting Okta's efforts to build a comprehensive identity authentication platform that can capitalize on the growing demand for intelligent agents [5]. - ServiceNow (NOW): Guggenheim upgraded the rating from "Sell" to "Neutral," stating that the current stock price is below the previously set target price, making it attractive [5]. - Rockwell Automation (ROK): Goldman Sachs upgraded the rating from "Sell" to "Neutral," raising the target price from $329 to $448, highlighting the potential operational leverage from structural price increases under new management [5]. - L3 Harris Technologies (LHX): Morgan Stanley upgraded the rating from "Hold" to "Overweight," increasing the target price from $350 to $367, based on a positive outlook for the aerospace and defense sector in 2026, with demand growth expected to outpace supply [5]. Downgraded Ratings - Zimmer Biomet (ZBH): Baird downgraded the rating from "Outperform" to "Neutral," lowering the target price from $117 to $100, citing disappointing performance expectations for 2025 and potential market share loss to Stryker's Mako orthopedic surgical robot [5]. - Capri Holdings (CPRI): Wells Fargo downgraded the rating from "Overweight" to "Hold," raising the target price from $25 to $27, indicating that previous positive factors driving the stock price have diminished, leading to increased market divergence on growth expectations [5]. - Lockheed Martin (LMT): Morgan Stanley downgraded the rating from "Overweight" to "Hold," reducing the target price from $630 to $543, while still optimistic about the aerospace and defense sector's outlook [5]. - StubHub (STUB): Citizens Bank downgraded the rating from "Outperform" to "Market Perform," with no target price set, anticipating increased market competition in 2026 that may limit market share growth [5]. - GitLab (GTLB): KeyBanc downgraded the rating from "Overweight" to "Sector Weight," with no target price set, expressing concerns over pricing power potentially hindering growth and increased execution risks due to a shift to a usage-based billing model [5]. Initiated Coverage - MongoDB (MDB): Raymond James initiated coverage with a "Market Perform" rating and no target price, noting the balanced market sentiment around the stock despite its strategic importance in the independent database platform sector [11]. - D-Wave Quantum (QBTS): Jefferies initiated coverage with a "Buy" rating and a target price of $45, highlighting the increasing market attention and application rates for various quantum computing architectures [11]. - Omnicom Group (OMC): Morgan Stanley resumed coverage with a "Hold" rating and a target price of $88, indicating that the company's merger integration efforts present both opportunities and risks [11]. - Freshpet (FRPT): Morgan Stanley initiated coverage with a "Hold" rating and a target price of $71, recognizing the long-term growth potential in the pet food industry but cautioning against short-term economic pressures [11]. - Jumia Technologies (JMIA): Craig-Hallum initiated coverage with a "Buy" rating and a target price of $18, emphasizing the company's optimized product offerings and logistics network as key drivers for achieving sustainable double-digit growth by 2030 [11].

Industry Overview - Quantum computing is entering a significant phase as the industry shifts focus towards scalability, real-world applications, and national strategic priorities by 2026 [1] - Governments are increasing funding for quantum technology, recognizing its importance for national security and AI sovereignty, while enterprises are testing quantum tools for complex optimization problems [2] Company Insights IonQ (NYSE: IONQ) - IonQ is positioned with a strong growth profile, advancing high-fidelity trapped-ion systems beyond 64 qubits through its acquisition of Oxford Ionics [3] - The company's revenue is increasingly derived from direct enterprise and government contracts, with Q3 2025 revenue reported at $39.9 million, a 222% increase year-over-year, despite a $1.1 billion net loss due to aggressive investments [4] - IonQ raised its 2025 revenue forecast to $106 million–$110 million, maintaining an adjusted EBITDA loss midpoint of about $211 million, with shares trading at $46, up over 6% year-to-date [4] D-Wave Quantum (NYSE: QBTS) - D-Wave focuses on application-driven strategies, enhancing the complexity of optimization problems with its Advantage2 system, which supports existing customers using quantum tools [6] - The company's deeper integration into enterprise workflows is leading to recurring usage and higher switching costs, with international expansion reducing reliance on U.S. government demand [7] - QBTS shares are up nearly 150% year-to-date, closing at $23.74 [7] Rigetti Computing (NASDAQ: RGTI) - Rigetti represents an asymmetric investment opportunity, with progress towards higher-fidelity modular superconducting systems potentially rebuilding investor confidence [10] - Recent government contracts, including a $5.8 million deal with the Air Force Research Lab for quantum networking, indicate growing confidence in Rigetti's technologies [10] - RGTI shares are up 17% in 2025, trading at $23, with expectations for positive developments that could lead to a sharp re-rating [11]

Company Overview - D-Wave Quantum is a technology company specializing in quantum computing hardware, software, and cloud-based services, addressing complex computational challenges for enterprise clients across various sectors [5] - The company has a market capitalization of $7.83 billion and reported a revenue of $30.6 million with a net income of -$398.8 million for the trailing twelve months (TTM) [4] Recent Insider Activity - John M. Markovich, the Chief Financial Officer, exercised 200,000 stock options and sold the resulting shares for a transaction value of $4.59 million, marking the largest single administrative disposition reported by him [1][7] - Post-transaction, Markovich retains 937,559 shares with a direct ownership value of $21.5 million [2] Market Context - As of December 15, 2025, D-Wave Quantum's one-year total return was 373%, indicating significant price appreciation and elevated valuation for the equity [7] - The transaction was part of a trading plan adopted by the CFO in August, prior to a sharp share price spike to its record high [10] Product and Service Offering - D-Wave Quantum develops and commercializes quantum computing systems, including the Advantage quantum computer, Ocean open-source programming tools, and Leap cloud-based quantum services [8] - The company generates revenue through hardware sales, cloud-based quantum computing access, and professional services for enterprise quantum application deployment, serving sectors such as manufacturing, logistics, financial services, and life sciences [8] Industry Position - D-Wave's Advantage2 quantum annealing system is recognized as an industry leader with over 4,400 qubits, enabling the exploration of multiple problems simultaneously [9] - The company is well-positioned in the quantum computing space, with a strong balance sheet showing $800 million in net cash, as the technology gains more use cases [11]

Core Insights - Quantum computing stocks have shown significant potential, with some stocks rallying as much as 5,400% over a trailing 12-month basis, indicating strong investor interest in the technology [4] - Historical trends suggest that early-stage technologies often experience a bubble-bursting event, leading to skepticism about the sustainability of current valuations in the quantum computing sector [6][7] - The current price-to-sales (P/S) ratios for quantum computing stocks are alarmingly high, with IonQ at 163, Rigetti Computing at 1,029, D-Wave Quantum at 337, and Quantum Computing Inc. at 3,346, indicating they are well beyond historical bubble territory [17] Industry Overview - The rise of artificial intelligence (AI) has been a significant driver for companies like Nvidia, which has seen its shares increase by over 21,800% in the past decade, setting a high benchmark for future technologies [2] - Quantum computing is still in its early commercialization phase, with major companies like Amazon and Microsoft providing access to quantum-cloud services, but broad-based commercialization is still years away [8] - The barrier to entry in quantum computing may be lower than perceived, as major tech companies like Alphabet and Microsoft are entering the space with their own quantum processing units [19] Company Analysis - IonQ raised $2 billion by selling 16.5 million shares at $93 per share, a common practice among early-stage companies that often leads to shareholder dilution [10][11] - Rigetti Computing, D-Wave Quantum, and Quantum Computing Inc. are expected to follow similar capital-raising strategies, which could negatively impact their stock prices [12] - The financial health of quantum computing companies is concerning, with IonQ reporting a gross margin of -747.41% and Rigetti Computing at -6849.48%, highlighting ongoing operational losses [9][20] Competitive Landscape - The "Magnificent Seven" tech giants have the financial resources to dominate the quantum computing space, posing a significant threat to smaller players like IonQ and Rigetti Computing [21][22] - The potential economic value of quantum computing is estimated to reach $850 billion by 2040, attracting interest from well-capitalized companies that can outspend smaller competitors [21]