Issue #161

Commercial Quantum Systems: 2 Picks Outperforming The S&P

The quantum computing revolution is quietly transitioning from a theoretical physics experiment into a commercial reality. For years, the narrative around quantum was defined by distant timelines and laboratory breakthroughs. Today, the conversation is shifting to practical, deployed hardware that solves real-world optimization and scaling challenges right now. As classical computing infrastructure hits its physical limits, the market is beginning to reward the specialized hardware and semiconductor pioneers building the foundation of this next computational leap.

This shift is already showing up where it matters most: relative performance. While the broader indices grapple with valuation questions, select leaders in the commercial quantum space have quietly decoupled from the pack, significantly outperforming the S&P 500 over the last 90 days as forward-looking capital begins to position itself.

👉 One company is the industry's only dual-platform quantum provider, actively deploying commercial annealing systems to solve complex optimization problems for global enterprises today.

👉 The other is a highly specialized semiconductor pioneer, developing the scalable photonics and optoelectronic hardware needed to bridge the gap between quantum processing and modern infrastructure.

👉 Both names are demonstrating remarkable relative strength, handily outperforming the S&P 500 over the last 90 days as commercial adoption accelerates.

In this edition, we break down D-Wave Quantum Inc. (QBTS) and Aeluma, Inc. (ALMU)—two pioneers at the absolute forefront of commercial quantum systems—and why their recent market outperformance is just the beginning of a massive secular shift.

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D-Wave Quantum Inc. (NYSE: QBTS) stands at the absolute vanguard of the next computational frontier, operating as a pioneer and commercial leader in the rapidly evolving quantum computing sector. As the industry's only dual-platform quantum computing provider, the company uniquely offers both quantum annealing systems—which are currently deployed commercially to solve complex optimization problems—and is actively developing universal gate-model quantum computer systems. By bridging the gap between theoretical quantum mechanics and practical, enterprise-grade problem solving, D-Wave aims to revolutionize industries ranging from logistics and financial modeling to materials science and artificial intelligence.

Business Model and Revenue Streams 📦

D-Wave Quantum Inc. operates a sophisticated business model designed to commercialize quantum technology long before universal gate-model systems reach full maturity. The core of D-Wave’s commercial strategy is its Quantum Computing as a Service (QCaaS) model, delivered through its proprietary cloud platform, Leap. Through Leap, enterprise customers, researchers, and developers can access real-time quantum physical systems and hybrid quantum-classical solvers without the capital-intensive burden of purchasing, installing, and maintaining cryogenic quantum hardware on-premise. This subscription-based cloud model provides D-Wave with a recurring, scalable revenue stream that grows alongside enterprise adoption.

In addition to cloud-based access, D-Wave generates revenue through professional services. Because quantum programming requires a fundamental paradigm shift from classical software engineering, D-Wave’s team of in-house experts collaborates directly with Fortune 500 companies and government agencies. These services help clients identify business challenges suitable for quantum acceleration, translate those challenges into quantum-native formulations (such as Quadratic Unconstrained Binary Optimization, or QUBO), and deploy hybrid applications. The company also selectively engages in direct hardware sales and maintenance contracts for customers requiring on-premise physical installations, typically national laboratories, defense contractors, or sovereign research institutions.

The macroeconomic landscape plays a dual role in shaping D-Wave’s financial trajectory. On one hand, the prolonged high-interest-rate environment has created a challenging backdrop for pre-profitability, high-beta technology companies. When capital costs are elevated, institutional investors tend to demand near-term cash flows, which can pressure the valuations of long-duration growth assets like quantum computing stocks. This risk-off sentiment in the broader market frequently triggers sharp price actions in tech equities, as seen during recent sector-wide pullbacks.

On the other hand, macroeconomic policy is increasingly shifting in favor of critical national technologies. Sovereign nations are racing to secure quantum supremacy, viewing it as a matter of national security and economic competitiveness. This has resulted in substantial government funding initiatives, such as the recent $100 million federal funding award shared within the industry, and the upcoming finalization of the CHIPS Act equity structures. These government-backed capital injections act as a powerful buffer against tight private credit markets, providing non-dilutive capital that supports D-Wave’s intensive research and development pipeline.

Recent Performance and Corporate Developments 📈

Q1 2026 Financial Highlights: 💰

• Revenue: $2.86 million ($2,858,000), representing a significant year-over-year decline of -80.95% from the prior year's period, highlighting the current lumpiness and early-stage volatility of commercial quantum contracts.
• Net Loss: -$18.36 million (-$18,357,000) for the quarter, reflecting the heavy, ongoing operational costs associated with quantum hardware development and commercial scaling.
• Diluted Earnings Per Share (EPS): -$0.05 per share.
• Profit Margins: Specific gross and operating margins are omitted due to data limitations in the current reporting period, though the substantial net loss relative to current revenue highlights high operating leverage and intensive research and development spending.

Strategic Initiatives and Mergers: 🤝

While D-Wave has announced no recent mergers or acquisitions, opting instead to focus on organic technological development and strategic commercial alliances, its product pipeline and commercial partnerships have seen extraordinary activity. A primary highlight is the company's recently unveiled, highly ambitious roadmap for fault-tolerant quantum computing. Under this plan, D-Wave aims to deliver a system featuring 100 logical qubits by 2032. This system is designed to perform over 1 million error-corrected physical operations, utilizing a unique dual-rail architecture specifically engineered to achieve massive reductions in physical qubit error rates.

On the commercial front, D-Wave has capitalized on the explosive growth of artificial intelligence. The company's prospects received a major boost following its integration with Nvidia's new Ising AI models, which leverage D-Wave's quantum annealing capabilities to accelerate complex machine learning training processes. Furthermore, the broader quantum ecosystem is experiencing a powerful wave of validation and capital interest. The successful Nasdaq listing of Quantinuum—the Honeywell-backed trapped-ion quantum computing firm—at a $60 per share IPO price, raising $1.68 billion, has sent a clear signal to Wall Street that quantum commercialization is a near-term reality rather than a distant prospect. Analysts anticipate that upcoming high-profile IPO filings from tech giants like OpenAI, SpaceX, and Anthropic could channel fresh, speculative liquidity directly into established, listed quantum pure-plays like D-Wave.

Profitability and Fair Value 🎯

Evaluating D-Wave’s profitability path requires a perspective tailored to deep-tech, paradigm-shifting hardware sectors. The company is currently unprofitable, carrying a trailing twelve-month (TTM) P/E ratio of -25.79 (with a forward-looking financial model P/E of -23.54). This negative earnings profile is typical for companies in the pre-commercialization or early-commercialization phases of revolutionary technologies, where massive capital expenditures in physics laboratories, cryogenic systems, and chip fabrication must precede widespread market adoption.

From a valuation standpoint, D-Wave trades at an exceptionally high trailing twelve-month Price-to-Sales (P/S) ratio of 762.34 (with an alternative FMP P/S calculation of 695.64). This astronomical multiple reflects a very small current revenue base relative to the company's equity valuation, indicating that the stock's current price of $25.83 is almost entirely driven by future growth expectations, intellectual property value, and the massive addressable market of quantum computing. Interestingly, the company's PEG ratio sits at 0.2868, which suggests that when factoring in the long-term, exponential growth projected for the quantum computing market, the current valuation could eventually look highly attractive if D-Wave successfully executes its commercial roadmap.

When compared to its immediate peers, such as Rigetti Computing and IonQ, D-Wave possesses a distinct advantage in that its quantum annealing systems are already actively solving real-world optimization problems for enterprise clients today. However, the stock remains highly volatile, experiencing dramatic price swings. For instance, while the stock has delivered a strong 43.90% return over the past year, it recently suffered a sharp pullback triggered by broader market anxieties and profit-taking in the semiconductor and AI sectors. Consequently, the current price reflects a highly speculative entry point where investors are paying a premium for technological leadership, balanced against the reality of near-term financial losses and a long path to GAAP profitability.

Analyst Estimates and Ratings 📊

Consensus Rating: Buy

Price Target: Not explicitly specified in the current research packet, though consensus targets across the quantum computing sector imply substantial upside potential ranging from 47% to 71% in the near term.

Wall Street analysts maintain an overwhelmingly bullish stance on D-Wave Quantum Inc., reflecting a strong buy-side consensus. Out of the 9 analyst firms actively covering the stock over the past six months, all 9 have issued a "Buy" rating, with 0 "Strong Buy", 0 "Hold", and 0 "Sell" ratings. The latest street action continues to reinforce this positive outlook, categorizing QBTS as a top pick within its niche. This unanimous bullishness is driven by the company's established commercial footprint, its unique dual-platform strategy, and the massive tailwinds expected from government funding and strategic AI partnerships.

Investor-Focused Takeaway: Is QBTS Right for Your Portfolio?

What to Watch in the Near Term: 📈

• Q2 2026 Earnings Release (Scheduled for August 6, 2026): Investors must closely monitor this release to see if revenue recovers from the steep YoY decline observed in Q1, and to assess the growth rate of Leap cloud subscriptions.
• CHIPS Act Equity Structure Finalization (Scheduled for September 15, 2026): This regulatory milestone will clarify how federal capital will be distributed, potentially unlocking non-dilutive funding for D-Wave's manufacturing and research facilities.
• Quantum Pipeline & Commercialization Update (Scheduled for October 20, 2026): This update will provide critical technical milestones regarding the development of the 100-logical-qubit system and the progress of the fault-tolerant dual-rail architecture.
• Enterprise and AI Integrations: Watch for further joint initiatives with Nvidia and other AI leaders, which could accelerate the adoption of hybrid quantum-classical computing in commercial machine learning.

Recommendation:

D-Wave Quantum Inc. (NYSE: QBTS) represents a classic high-risk, high-reward investment opportunity that is best suited for aggressive growth portfolios with a long-term investment horizon. On the positive side, the company is a clear technological pioneer with a functioning, commercially viable product in its quantum annealing systems, a clear roadmap to fault-tolerant universal quantum computing, strong government backing, and unanimous support from Wall Street analysts. However, conservative investors should exercise caution. The company’s astronomical P/S ratio, current lack of profitability, and highly volatile price action mean that any delay in technological milestones or a shift to a risk-off macroeconomic environment could result in significant short-term capital depreciation. For those who believe in the imminent commercial reality of the quantum era and can tolerate high volatility, QBTS offers one of the purest and most strategically positioned vehicles to capture this secular technological shift.

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Aeluma, Inc. (NASDAQ: ALMU) is an emerging, highly specialized semiconductor company at the forefront of the optoelectronics and quantum computing frontiers. Operating within the semiconductor GICS sub-industry, the Goleta, California-based company focuses on developing high-performance, scalable photonics technologies designed to address the critical hardware bottlenecks currently facing mobile devices, artificial intelligence (AI) infrastructure, defense and aerospace systems, and advanced robotics. With a market capitalization of approximately $321 million and a share price trading around $22.64, Aeluma represents a classic micro-cap innovator positioned at the intersection of optical communications and next-generation computing architectures.

Business Model and Revenue Streams 📦

Aeluma’s business model is centered on the commercialization of proprietary optoelectronic technologies, particularly its unique capabilities in integrating compound semiconductors, such as Indium Phosphide (InP), with standard silicon manufacturing processes. In the modern semiconductor landscape, traditional electronic chips are reaching their physical limits in terms of speed, heat dissipation, and power consumption. Aeluma addresses this fundamental challenge by utilizing photonics—using light instead of electricity to transmit data. By combining the high-performance light-emitting capabilities of compound semiconductors with the cost-effective scalability of silicon foundries, Aeluma aims to deliver high-bandwidth, energy-efficient optical chips that can be integrated seamlessly into existing supply chains.

The primary revenue streams for Aeluma are structured around product sales of its specialized optical chips, technology licensing agreements, and collaborative research and development contracts. The company targets several high-growth end markets. In the AI and data center space, its technology is designed to alleviate the massive bandwidth bottlenecks that occur when thousands of GPUs are linked together to train large language models. In the automotive and robotics sectors, Aeluma’s technology is applicable to Light Detection and Ranging (LiDAR) systems, which require high-performance photodetectors to map environments in three dimensions. Additionally, the company serves the defense and aerospace industries, where secure, high-speed, radiation-hardened optical communications are paramount.

Macroeconomic policies and broader industry trends exert a significant influence on Aeluma’s operational trajectory. Currently, the macroeconomic environment is characterized by intense geopolitical focus on semiconductor supply chain security. Government initiatives, such as the CHIPS and Science Act in the United States, emphasize domestic manufacturing and the development of next-generation hardware technologies, creating a favorable regulatory backdrop for US-based innovators like Aeluma. Furthermore, the massive capital expenditure boom from hyperscale cloud providers investing in AI infrastructure serves as a major demand driver.

However, macro headwinds also present challenges. The prevailing high-interest-rate environment increases the cost of capital for pre-profit technology companies, making the market less tolerant of high cash burn rates and long commercialization timelines. Trade restrictions and export controls on advanced semiconductor technologies also require Aeluma to navigate complex regulatory frameworks to protect its intellectual property while pursuing global market opportunities.

Recent Performance and Corporate Developments 📈

Aeluma’s recent financial performance reflects its transition phase from an advanced research-and-development entity to a commercial-stage enterprise. The company's financial results demonstrate both the high-cost nature of pioneering semiconductor fabrication and the early stages of commercial traction.

Q3 Fiscal 2026 Financial Highlights: 💰

• Revenue: $1,222,000, representing a slight year-over-year decline of 2.63% compared to the same period in the prior fiscal year.
• Net Income: -$1,800,000, reflecting continued investments in research, development, and scaling of manufacturing capabilities.
• Diluted Earnings Per Share (EPS): -$0.10 for the quarter.
• Gross and Operating Margins: Negative, as is typical for early-stage semiconductor firms operating below scale-level manufacturing volumes.
• Average Daily Trading Volume: 983,595 shares, indicating healthy liquidity for a micro-cap stock.

Strategic Initiatives and Mergers: 🤝

There are no recent mergers or acquisitions to report for Aeluma, Inc. Instead, the company has focused its corporate development efforts on organic growth, technological milestones, and ecosystem partnerships. A major highlight occurred on May 21, 2026, when Aeluma’s CEO, Jonathan Klamkin, was announced as the recipient of the prestigious Indium Phosphide and Related Materials Award, highlighting the company’s deep technical leadership and industry recognition in compound semiconductor integration.

On May 28, 2026, Aeluma announced an accelerated timeline for its quantum commercialization efforts. This development is particularly notable as the market increasingly looks for viable hardware solutions to support quantum computing and quantum communication networks. Management noted that optical networking supply chains are facing severe constraints due to the sheer volume of data center investments, positioning Aeluma's scalable photonics technology as a critical alternative to traditional, strained supply chains. The company's participation in several prominent investor conferences throughout May 2026 has also served to increase its visibility among institutional investors looking for under-the-radar AI and quantum infrastructure plays.

Profitability and Fair Value 🎯

Evaluating Aeluma's profitability and valuation requires a perspective tailored to early-stage, high-growth technology disruptors. Currently, the company is unprofitable, posting a net loss of $1.8 million for the quarter ending March 31, 2026. This unprofitability is reflected in its trailing twelve months (TTM) P/E ratio of -65.44 (with an FMP ratio of -64.65) and an EV/EBITDA of -47.54. These metrics are standard for a semiconductor startup heavily investing in capital-intensive cleanrooms, chip design, and fabrication processes before reaching commercial scale.

From a valuation standpoint, Aeluma trades at a high price-to-sales (P/S) ratio of 61.75 (61.01 on an FMP basis). A P/S ratio of this magnitude indicates that the market is pricing in substantial future growth and rapid commercial adoption of its technology. The stock has experienced strong price action over the past year, posting a 1-year price change of 57.22%, driven by growing investor enthusiasm for the "AI optical inflection trade." Investors are increasingly recognizing that physical bottlenecks in data centers—specifically the speed at which data can move between processors—could limit the next phase of AI expansion, making Aeluma’s photonics solutions highly valuable.

Interestingly, the company's PEG ratio is recorded at 0.33. While PEG ratios for pre-profit companies must be interpreted with caution, this low figure suggests that if Aeluma can successfully execute its commercialization timeline and tap into its projected growth potential, its current valuation could look remarkably cheap in hindsight. However, in the near term, the stock remains vulnerable to valuation resets, technical pullbacks, and potential insider selling pressures, as highlighted by technical catalysts earlier in the year. Compared to established, profitable semiconductor peers, Aeluma carries a significantly higher risk-reward profile, trading purely on its intellectual property and future market share capture.

Analyst Estimates and Ratings 📊

Despite its small market capitalization, Aeluma is beginning to attract attention from Wall Street analysts who specialize in identifying niche semiconductor and quantum computing innovators.

Consensus Rating: Buy

Price Target: Not specified in current consensus tracking, but the stock has garnered a unanimous "Buy" rating from the covering analyst community.

The current analyst consensus over the past six months stands at 1 Buy rating, with 0 Strong Buys, 0 Holds, and 0 Sells. The latest street action continues to reinforce this bullish stance, categorizing Aeluma as a high-potential, under-the-radar AI optical play. The company was recently featured in the "Undercovered Dozen" series on Seeking Alpha, highlighting its status as a lesser-known gem that has yet to be fully priced in by broader institutional markets.

Investor-Focused Takeaway: Is ALMU Right for Your Portfolio?

What to Watch in the Near Term: 📈

• Commercialization and Customer Wins: Watch for announcements regarding commercial supply agreements or pilot programs with major AI data center operators or defense contractors, which would validate Aeluma's technology at scale.
• Cash Runway and Capital Expenditures: Monitor the company's cash burn rate in upcoming quarterly filings to assess whether they will need to raise capital, which could dilute existing shareholders.
• Quantum and Photonics Milestones: Track progress on the accelerated quantum commercialization timeline and any technological updates regarding their Indium Phosphide integration process.
• Earnings and Guidance: The upcoming Q2 2026 earnings release (expected in approximately 61 days) will be a critical catalyst to gauge revenue trajectory and management's forward outlook.

Recommendation:

Aeluma, Inc. (NASDAQ: ALMU) represents a compelling, high-beta investment opportunity for growth-oriented portfolios. The company is positioned at the intersection of two powerful secular trends: the AI-driven demand for high-speed optical networking and the long-term commercialization of quantum computing. Its proprietary technology, which integrates high-performance optical materials with standard silicon manufacturing, addresses a genuine physical bottleneck in modern computing.

However, conservative investors should exercise caution. With a P/S ratio exceeding 61 and ongoing net losses, the company’s current valuation is highly speculative and relies heavily on future execution. The stock is subject to volatility, potential technical pullbacks, and the execution risks inherent in scaling advanced hardware. For investors with a high risk tolerance and a long-term investment horizon, Aeluma offers exposure to a unique, under-the-radar hardware innovator that could deliver substantial returns if its technology becomes a standard component of the future AI and quantum infrastructure. A disciplined, staged positioning approach is recommended to mitigate the volatility associated with this promising micro-cap stock.

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Final Take: The Quantum Pioneers Solving Tomorrow's Complexities Today

The quantum computing revolution is transitioning from theoretical physics to commercial reality. This paradigm shift requires two distinct pillars: operational quantum processors capable of solving complex optimization problems today, and advanced photonic hardware to eliminate the data bottlenecks of tomorrow.

That's where D-Wave Quantum (QBTS) and Aeluma (ALMU) stand apart.

🌀 D-Wave Quantum Inc. (QBTS) — The Commercial Pioneer of Quantum Annealing

✔ The industry's only dual-platform provider offering both commercial quantum annealing and gate-model development

✔ Actively deployed by enterprise clients to solve complex, real-world optimization and logistics problems today

✔ Shifting the quantum narrative from theoretical research to practical, cloud-based subscription revenue

➤ Best for: Investors seeking pure-play exposure to commercialized quantum software and processing power with active enterprise adoption.

💡 Aeluma, Inc. (ALMU) — The Photonic Architecture Bridging Quantum and Silicon

✔ Proprietary optoelectronic technology addressing critical hardware and data transfer bottlenecks

✔ High-performance photonics scaled for AI infrastructure, defense, aerospace, and next-gen computing

✔ Micro-cap innovator with a massive addressable market in optical communications and sensor tech

➤ Best for: Investors looking for a high-upside, specialized hardware play positioned at the intersection of advanced optics and quantum scaling.

Investor Insight

🧩 Want immediate commercial quantum application and optimization software? → QBTS

⚙️ Want the foundational optoelectronic hardware to scale next-gen computing? → ALMU

Bottom Line:

Quantum computing cannot scale on theoretical promises alone—it requires specialized processing architecture and the high-speed optical hardware to link it all together. D-Wave provides the computational engine for complex problem-solving, while Aeluma builds the photonic pathways necessary to move massive amounts of data without bottlenecks. As industries prepare for the post-classical computing era, QBTS and ALMU represent two distinct, highly strategic ways to position your portfolio for the quantum leap.

Not investment advice. Do your own research.