IonQ: A Contender in Quantum Computing or Just Another High-Flying Stock?
In the last two years, discussions around artificial intelligence (AI) have largely centered on graphics processing units (GPUs). These chips excel in parallel processing, making them ideal for generative AI applications. Currently, Nvidia dominates the data center GPU market, boasting an impressive 88% market share.
Exploring the World of Quantum Computing
Conventional computers function using binary bits (0s and 1s), whereas quantum computers employ quantum bits, known as qubits. Unlike traditional bits, qubits can exist in multiple states at once, a property referred to as superposition.
Though it may sound futuristic, the concept is very much relevant today. Modern computers are commonplace, yet many challenges still require high-accuracy solutions. Businesses, such as pharmaceutical companies conducting drug trials or scientists making climate predictions, often rely on lengthy trial-and-error methods.
Quantum computing has the potential to transform this landscape by addressing complex problems that traditional computers cannot solve efficiently, potentially doing so in mere minutes or days.
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IonQ: Innovating in Quantum Computing
IonQ focuses on a method called “trapped ion” quantum computing, where ions act as natural qubits. This technique allows for easier manipulation of quantum states, leading to lower error rates and longer-lasting qubit stability.
This characteristic can enhance the processing of complex algorithms at scale. Recently, IonQ CEO Peter Chapman highlighted chemistry and machine learning as some of the “leading applications” for quantum computing.
Researchers and software developers can access IonQ’s services through major cloud platforms like Azure, Google Cloud, and Amazon Web Services. This strategy covers considerable capital expenditures and hardware costs and grants companies easier access to quantum capabilities for quicker scaling.
The Competition: Can IonQ Match Nvidia?
Despite IonQ’s ambitions, investors should recognize some crucial factors. First, IonQ isn’t alone in the quantum computing race. Major companies like IBM, Alphabet (Google), Microsoft, and Rigetti Computing are also making significant investments in this area. Additionally, since IonQ has yet to reach profitability, competing with established tech giants could prove challenging.
This leads to another point: IonQ’s stock has surged over 150% in 2024, outpacing nearly all of the “Magnificent Seven,” with Nvidia as an exception.
However, with a price-to-sales (P/S) ratio of 185, IonQ’s stock appears overvalued, reflecting more hype about AI and quantum computing than solid business fundamentals. Observers suggest that IonQ’s stock has already experienced a meteoric rise akin to Nvidia’s and may be due for a correction. It remains to be seen whether IonQ can achieve a status comparable to Nvidia’s in the AI sector.
Is Now the Right Time to Invest in IonQ?
Before considering an investment in IonQ, it’s important to weigh your options carefully.
The Motley Fool Stock Advisor team has recently identified what they believe are the 10 best stocks to buy now—none of which includes IonQ. Reports suggest these companies could yield impressive returns in the years ahead.
Reflecting on the past, if Nvidia had made this list back on April 15, 2005, a $1,000 investment would now be worth $841,692!*
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Adam Spatacco has positions in Alphabet, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool recommends International Business Machines and that the following options be taken: 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.
