Will IonQ Unlock the Next Millionaire-Making Opportunity in Quantum Computing?
Finding a company that could potentially turn a small investment into a fortune is quite rare. Still, such opportunities exist, even if they often escape notice. For instance, a $10,000 investment in Nvidia ten years ago would now be worth an incredible $2.71 million. This thrilling prospect of discovering future millionaire-makers motivates many investors today.
One sector attracting attention for its potential is quantum computing. Recently, Alphabet gained publicity for its Willow quantum computing chip, but there are other dedicated companies in the field worth considering. One notable example is IonQ (NYSE: IONQ). Will it be the stock that makes you a millionaire by 2035?
IonQ’s Strong Financial Backing from Key Contracts
To understand the relevance of IonQ, it’s essential to grasp the difference between traditional computers and quantum computers. Traditional computers operate using bits, which convey information in a binary format of 1s and 0s. In contrast, quantum computers use qubits, which represent the likelihood of information being a 1 or 0. This fundamental difference means quantum systems can process far greater amounts of data, boosting their computing power dramatically.
The applications of quantum computing promise vast advancements, and IonQ’s recent partnerships underline this potential. Last quarter, IonQ announced a collaboration with AstraZeneca to enhance drug discovery processes. Additionally, it secured a deal with engineering simulation firm Ansys to integrate quantum computing into its operations. The highlight of IonQ’s $63.5 million in third-quarter bookings was a substantial $54.5 million research contract with the U.S. Air Force Research Lab. These agreements provide essential revenue to support IonQ’s ongoing research and development efforts.
Image source: IonQ.
IonQ experienced remarkable growth, with revenue skyrocketing by 102% in the third quarter. However, this growth stemmed primarily from contracts rather than selling quantum computers at scale. The entire quantum computing sector is still in its early stages, as the true utility of the technology remains unrealized. Consequently, IonQ continues to experience cash burn.
Despite generating $12.4 million in revenue during Q3, IonQ faced a net loss of $52.5 million. This significant deficit raises concerns about the company’s sustainability without achieving profitability. As of the end of Q3, IonQ had approximately $360 million in cash and short-term investments, which provides a temporary financial cushion.
The Uncertain Race for Quantum Computing Supremacy
The competition in the quantum computing market is fierce and unpredictable. While Alphabet celebrated a recent advancement, there’s no telling when IonQ could announce a similar breakthrough. Major players like IBM, Microsoft, and Nvidia also pose challenges in this emerging field. It’s important to note that IonQ’s quarterly loss of $50 million could be little more than a margin for these technology giants.
IonQ, however, benefits from its vital contract with the Air Force Research Lab and its smaller size, which may allow for greater operational agility.
Yet, the path to success is far from guaranteed. Should IonQ capture a significant market share, its stock could offer substantial returns for investors. Nonetheless, this outcome remains a gamble. For those considering investments in quantum computing, here are two strategies to consider:
- Create a diversified portfolio by investing in several small quantum computing companies alongside larger established players.
- Limit investments in high-risk stocks like IonQ to a small percentage of your total portfolio.
By implementing these strategies, you may increase your exposure to potential success while minimizing risks if IonQ’s efforts do not pay off. Personally, I would restrict my investment in IonQ to about 0.5% of my overall portfolio, acknowledging the high stakes involved. If all goes well, that small investment could grow significantly.
A New Chance at Potentially Profitable Investments
Have you ever felt you missed opportunities to invest in the most prosperous stocks? If so, it’s time for a fresh look.
Occasionally, our expert analysts issue a “Double Down” stock recommendation for companies believed to be on the verge of significant growth. If you think the moment for investment has passed, now is an optimum time to act before you lose your chance. The following highlights illustrate past success:
- Nvidia: A $1,000 investment when we recommended it in 2009 would be worth $348,112 now!*
- Apple: A $1,000 investment in 2008 has grown to $46,992!*
- Netflix: A $1,000 investment since our recommendation in 2004 would have risen to $495,539!*
Currently, we are releasing “Double Down” alerts for three exceptional companies, and opportunities like this may not come again soon.
See 3 “Double Down” stocks »
*Stock Advisor returns as of December 9, 2024
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool recommends Ansys, AstraZeneca Plc, and International Business Machines and 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 the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
