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Tom Yeung here with your Sunday Digest.
In 1999, the legendary value investor Bill Miller walked out of a meeting with executives from Amazon.com Inc. (AMZN).
Miller was convinced he’d found the most capital-efficient retailer ever created. In a Barron’s article, he detailed how Amazon was potentially the future of shopping and concluded that the “payoff for being right is high.”
His Legg Mason Capital Management fund bought millions of shares for an average cost of $1.50, adjusted for splits.
Miller was right. Eventually.
Today, Amazon is worth over $250 a share. The company towers over the retail landscape, dominating areas like books, smart home devices, and household goods. It’s now hard to remember life without same-day shipping.
But Miller lost a lot of money on Amazon at first.
You see, the fund manager began buying shares right as the dot-com bubble was bursting. Amazon’s stock would fall to $0.30, and Miller’s position was in the red for years.
That’s why I warned you about buying quantum computing stocks last month. Even though shares of these companies will likely do fantastically over the next decade, their risky nature means you could lose a lot of money at first. Much like investing in Amazon in the 1990s, you need a 10-plus year horizon to buy quantum stocks today, if you plan on using a buy-and-hold strategy.
However, our resident trading expert, Jonathan Rose, is more interested in generating returns today.
In fact, he’s so confident in his trading system that he’s calling his latest free presentation the $10K to $100K Challenge. In it, he outlines how his system spots the tiny clues that professional traders leave behind, opening the door to more immediate returns… the sort that can turn $10,000 into $100,000 in just a year.
He will also make available three of his top trades after that presentation. And today, I’ve been given permission to reveal one of his three picks.
A Quantum Leap Forward
Quantum computers have long been the “holy grail” of computing. That’s because the subatomic particles described by quantum physics are not limited by the binary “0s” and “1s” of ordinary computers. Instead, quantum “bits” can live between “0” and “1” as well.
The possibilities here are vast. Quantum computers will be able to perform enormous numbers of calculations at the same time. They will also be able to break modern encryption, develop new drugs, and maybe even train AI models. I expect the industry to be worth trillions in a decade or so, and I highlighted three top contenders last month with the technology that could get us there.
However, those seeking shorter-term gains might want to consider D-Wave Quantum Inc. (QBTS), one of Jonathan’s recommendations in his $10K to $100K Challenge.
Let’s start with some background on the company…
A Business and a Bet
D-Wave began in 1999 as a spinout from the University of British Columbia in Vancouver. For the first 10 years, it was a physics project with not much of a business model. But in 2011, D-Wave became the first company to ever sell a quantum machine when Lockheed Martin Corp. (LMT) bought one for about $10 million.
D-Wave was so early because it used a relatively limited version of quantum computing known as annealing. It’s a narrow approach that can only do one thing: Find the lowest point.
There’s no encryption breaking. No drug molecule simulations. No Shor’s algorithm.
Instead, D-Wave’s computers can only do optimization problems, like finding the lowest point in a mountain range, or the shortest trip a postal worker can make. That makes D-Wave’s “computers” more like a wind tunnel – a useful tool, but good at only one task. That is not enough to turn D-Wave into a $100 billion company.
That’s almost certainly why D-Wave bought Quantum Circuits earlier this year for $800 million. That Yale University spinout is working on a more general-purpose quantum computer that now puts D-Wave on a better track to reaching the “holy grail” of computing.
The Bet Worth Taking
The obvious problem with D-Wave today is the same one that Bill Miller faced in 1999 with Amazon:
You know a new technology is a game changer, but it’s not clear when to get in.
Jonathan Rose’s system looks to solve this. By tracking “smart money” activity, his system detects when and where Wall Street is placing their bets and picks out which names are most likely to break out. It’s helped him navigate markets for over two decades, and he continues to use it to find the most promising bets for further investigation.
The system is now flagging D-Wave as a potential breakout stock.
Since the end of July, traders have been making major bullish bets on D-Wave. Open interest on bullish positions has more than doubled since July, while bearish positions are only up 67%. This has happened even as D-Wave’s stock was going down.
The positive bets are particularly noticeable for contracts expiring in late Q1 2027. The heavy bullish trading activity centered around that period suggests that Wall Street is convinced D-Wave will make a major upward move by March of next year.
So, why might Wall Street’s “smart money” buy a quantum stock that’s down 57% since June?
It certainly has nothing to do with quantum technology itself. A useful general-purpose quantum computer won’t appear until at least 2030, and I don’t expect D-Wave to get there first. Alphabet Inc. (GOOGL) is much further along.
But the interesting thing about tactical trading in D-Wave is that it does not depend on quantum computing at all. Instead, it’s all about certain announcements happening as scheduled.
The Bear Case is Breaking
For nine years D-Wave’s short sellers have had one argument: Revenue never comes.
Quarter after quarter, D-Wave has announced disappointing sales numbers that barely dented its nine-figure cost base. In fact, the company has now missed revenue estimates in 14 of its past 17 quarters. It’s why short interest has risen from around 10% of floated shares in 2024 to 16% in 2025, and almost 20% today.
The sharks are circling because there’s so much blood in the water.
The tide is finally turning. For the first time in the company’s history, D-Wave now has a meaningful amount of contracted revenues on its balance sheet. The company signed a $20 million contract with Florida Atlantic University in January, which helped bring its overall backlog to $40.7 million, up 688% in a year. It expects to convert more than half of that backlog into revenues by year-end.
That means fourth-quarter revenue estimates of $32 million are no longer just built on hope. The company finally has contracts it can convert into revenue, and its year-end numbers published in February should show a historic “surge” in sales.
That would suddenly change the optics for QBTS. The quantum computing firm would transform from a near-zero revenue company to one that looks like a hypergrowth firm. That alone could be enough to lure in new money that chases out the short sellers.
Rushing for the Exits
Chasing out the shorts deserves a special mention. D-Wave is currently a highly shorted stock, and these bearish traders are now sitting on large paper profits that can evaporate in an instant. If the stock suddenly shoots up (whether from rising revenues or swarm buying), every dollar of gains for long holders is a dollar of loss for these bears.
And here’s the thing: When short sellers close out, they need to buy the stock, not sell. That creates an upward pull on share prices, causing even more short sellers to close out, and so on.
This vicious cycle of buying is called a short squeeze, and it is every short seller’s worst nightmare.
So, how likely is it to happen to D-Wave?
As Eric Fry explains in a recent Fry’s Investment Report update (subscription required), the risk of a short squeeze is summed up by one measure known as “days to cover”:
Professional short sellers gauge crowding with a simple yardstick called “days to cover.” It answers one question: If every short seller tried to buy back their shares at once, how many days of normal trading would it take to get the job done?
Today, D-Wave’s 71 million shorted shares would take 4.5 days to unload, roughly the same amount of time it would take GameStop Corp.’s (GME) short sellers to exit. And because D-Wave is even more volatile than GameStop (since it is a smaller firm), the risk of a squeeze is even higher.
We saw this firsthand in September 2025, when QBTS surged from $15 to almost $40 within a month. Quantum stocks saw renewed investor interest, and the initial rise was compounded as short sellers cut their positions.
What should have been a minor rally in QBTS turned into a bonanza for the longs.
D-Wave’s “days to cover” number is now even higher than in 2025. And so, if the stock begins to rally, we could easily see shares going into the mid-$20 range on short covering.
Turning a Good Idea into a Great Trade
Now, I must note that a tactical position in QBTS is very risky. The company is still losing money, and the expected Q4 sales boost won’t come close to helping D-Wave break even.
Analysts expect net losses to hit $102 million this year, driven by heavy spending on research, sales, and stock-based compensation. Next year looks even worse as R&D spending ramps up.
That’s why investors need a way to tilt the odds further in their favor.
To do this, Jonathan uses a particular type of trade that will benefit if QBTS moves higher through March 2027. The maximum amount you can lose is the money you put in – much like what happens when a stock goes to zero. For a speculative company like D-Wave, this is always a real possibility.
But if QBTS doubles to $25, Jonathan’s strategy would net you a 6X increase by March, rather than the 2X rise had you just bought the stock outright.
Now, if this sounds too good to be true, I’d like you to watch Jonathan’s presentation. In it, he explains exactly how he sets his trades up for such lopsided gains, how to know when it’s time to cut losses, and how you too can use his system to identify potential winners and make the right kinds of trades.
We know D-Wave is an extremely risky stock in the short term. So, we might as well set up any wager to magnify gains if they materialize.
Click here to watch Jonathan’s presentation.
Until next week,
Thomas Yeung, CFA
Market Analyst, InvestorPlace
