Is IonQ a Smart Investment in Quantum Computing Technology?
As artificial intelligence (AI) companies invest hundreds of billions into enhancing the technology and its necessary infrastructure, many investors are now focused on the next frontier. Quantum computing has emerged as an enticing area for investors eager to look ahead.
This interest is understandable due to the immense potential that quantum computing holds. However, investors must remain grounded and shield themselves from the overwhelming hype that often accompanies groundbreaking technological advancements. With this in mind, is IonQ (NYSE: IONQ), a prominent figure in the quantum computing sector, worth considering now?
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Understanding Quantum Computing
At a minuscule scale, the world behaves in ways that defy our everyday experiences. This unique behavior of subatomic particles opens new possibilities for computing. When discussing quantum particles, we are referring to entities much smaller than human cells. To put this in perspective, if a quantum particle were the size of a human cell, that cell would be as large as the Earth, with you equating to a mass of several thousand suns.
Two fundamental properties of quantum particles are superposition and entanglement. Superposition enables a quantum particle to exist in two states simultaneously. This concept is particularly useful because traditional computer chips utilize circuits that operate in one of two states: on or off. In a standard computer, these are known as bits. In contrast, quantum computer chips utilize quantum bits, or qubits, which can be both on and off at the same time.
The second property, entanglement, refers to the phenomenon where quantum particles become interconnected, meaning any change to one particle instantaneously impacts the other, regardless of distance. This phenomenon was so perplexing to Einstein that he referred to it as “spooky action at a distance.”
Combining these two characteristics allows a quantum computer to represent a vast array of states concurrently with a minimal number of qubits. Unlike conventional computers, which process possibilities sequentially, quantum computers can evaluate multiple possibilities simultaneously.
The Importance for Investors
The unique capabilities of quantum computing could lead to groundbreaking advancements across numerous industries, unlocking significant value. Its potential applications include discovering complex patterns in extensive data sets that are beyond human or current AI comprehension, revolutionizing healthcare by speeding up drug discovery processes, and creating highly efficient batteries and innovative carbon-capture materials to tackle energy storage challenges critical for the clean energy transition.
This potential value remains vast, yet the timing for investors is crucial. The ongoing question is: who will ultimately capitalize on this opportunity, and when will that occur?
The quantum can supercharge computing. Image source: Getty Images.
Challenges Ahead for IonQ and the Quantum Industry
Despite the advancements made, quantum computing remains in the early stages of development. The very characteristics that make quantum computing powerful also present significant challenges, as qubits can be unpredictable and
quantum systems face issues with stability and data integrity.
IonQ employs a “trapped-ion” method to address these challenges. While this strategy provides advantages in qubit stability compared to its competitors, it comes with trade-offs in terms of speed and scalability.
Financially, IonQ reported an adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) loss of $107.2 million for 2024. With $363.8 million in cash and investments, the company has approximately three and a half years of operational runway left. This is a relatively robust position for an early-stage company like IonQ, which commonly operates at a loss until technology matures. Notably, this runway exceeds that of its competitor, Rigetti Computing.
However, quantum computing isn’t expected to achieve commercial viability anytime soon. Experts estimate that we are at least a decade away from significant market-ready solutions. IonQ’s recent inclusion in a DARPA quantum initiative—the same research program that laid the foundational technology for the internet and GPS—underscores this timeline. While this participation validates IonQ’s approach, DARPA has set an ambitious target for a functional quantum computer by 2033.
The Bottom Line
Given the current timeline, it may be premature to invest heavily in IonQ at this point. The company is likely to require substantial additional capital, which could dilute existing shareholder value. Furthermore, IonQ faces fierce competition, not only from quantum-focused companies like Rigetti but also from established tech giants that can finance their in-house quantum research without it adversely affecting their finances.
For risk-tolerant investors eager to enter the quantum computing space now, diversification could be a smart strategy. Consider allocating investments across IonQ, Rigetti, and other emerging quantum companies, alongside major tech firms like Alphabet and Microsoft that are also pursuing development in this field. With quantum technology still in its infancy, the most successful approach remains uncertain.
Should You Invest $1,000 in IonQ Right Now?
Before purchasing stock in IonQ, weigh the following:
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Johnny Rice has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet and Microsoft. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
