D-Wave Quantum: B. Riley Reiterates $40 Target as Revenue Miss and Cash Burn Undercut the Quantum Story

B. Riley keeps a $40 target on D-Wave Quantum, but Q2 revenue of $3.1 million missed estimates and free cash flow burned $79 million in H1 2026.

With the Quantum World Congress set to open Wednesday, Wall Street's quantum bulls are making their case once more. B. Riley Securities analyst Craig Ellis has reaffirmed his buy rating on D-Wave Quantum and kept a $40 price target on the stock, arguing that U.S. quantum policy is shifting from pure research funding toward commercial deployment.

That thesis deserves scrutiny. The enthusiasm surrounding quantum computing's technological promise has, for now, papered over a far less inspiring financial picture at the company itself.

A Top Line That Isn't Moving

D-Wave's second-quarter 2026 results tell the story plainly. Revenue came in at just $3.1 million, well short of the $4.02 million consensus estimate. Strip out an earlier system sale, and the top line has effectively stood still for two years. Bookings did rise 59% in the quarter, but a durable, high-volume business has yet to materialize.

Pioneering science earns respect. In public markets, though, what counts is the ability to convert technology into dependable revenue. As long as corporate customers treat quantum machines as test-bed experiments rather than production tools, the commercial foundation remains uncomfortably thin.

Spending Outpaces Growth by a Wide Margin

While sales stall, costs are surging. GAAP operating expenses jumped 93% year over year in the second quarter to $54.98 million, and the adjusted EBITDA loss widened to $37.1 million. The January completion of the Quantum Circuits acquisition is among the items weighing on the numbers.

The strain on the balance sheet is considerable. Free cash flow burned through $79 million in the first half of 2026, and cash plus marketable securities fell by $273.1 million over twelve months to $546.2 million. News that CFO John Markovich stepped down in early September — with Greg Golkov taking over on an interim basis — does little to inspire confidence in the company's financial stewardship.

Management's Hopes Rest on Year-End System Sales

D-Wave's leadership is now pointing to the fourth quarter. CEO Alan Baratz has flagged meaningful revenue growth ahead from the planned sale of two annealing systems.

Such deals, however, are lumpy one-off events rather than a substitute for recurring income. And the company does not expect fault-tolerant machines with 100 logical qubits until 2032 — a painfully long stretch for a technology that is already consuming substantial capital.

What the Market Is Already Pricing In

The shares changed hands at EUR 15.32 on the day of the primary report, down 32% since the start of the year and 62% below their 52-week high. A separate reading put the stock at EUR 15.31 in European trading, a modest 0.7% daily decline, following a bounce earlier in the week. The 52-week peak stands at EUR 40.41.

Investors weighing the reiterated recommendation should read it carefully. The B. Riley note offers neither fresh revenue estimates nor an updated fundamental valuation. The firm also discloses that it expects compensation for investment-banking services from D-Wave within a three-month window. No specific new funding commitments or company-level catalysts were cited as the trigger for the rating.

At current levels, the equity remains above all a speculative wager on the industrial adoption of quantum computers. The pivotal question is whether D-Wave can use the upcoming congress to demonstrate genuine commercial momentum and measurable market traction.

Until the company reins in its heavy cash outflows and proves it can generate predictable revenue, conference headlines and analyst endorsements offer little support for a lasting turnaround.