Quantum computing is an emerging investing trend that attracts many people. The processing power that quantum computers unlock is unheard of in today’s classical computing society, even though we’re training advanced AI models in a relatively short amount of time. One of the top quantum computing stocks investors have on their radar is IonQ (IONQ -3.08%).
Many people are convinced that this is a once-in-a-geneation investment trend that could set people up for a lifetime if they pick the right stocks. So, is IonQ one of those top stocks? Let’s take a look.
Quantum computing is far more potent than classical computing
The primary difference between classical computing and quantum computing is how these two store information. Classical computing uses bits, which are either a zero or a 1. Quantum computing uses qubits, which are better described as the probability of information being a zero or a 1. Because qubits can be any number between a zero and a 1, it infinitely expands the amount of information it can store. However, it also multiplies errors, as a random number between zero and 1 is far less accurate than just a zero or a 1.
This is a problem that quantum computing companies must solve or the product will never be commercially relevant. Imagine running a calculation on a quantum computing Excel spreadsheet, only for the answer to be right only part of the time. This is unacceptable, but quantum computing companies are starting to make these devices more accurate.
IonQ expects to achieve 99.9% Native Qubit Gate Fidelity in 2024 and 99.95% fidelity in 2026. These are significant advancements that show how well IonQ’s products are performing.
This is also why IonQ continues to receive huge contracts. In September 2024, it inked a $54.5 million deal with the Air Force Research Lab to develop and build its quantum computer. That agreement was expanded by another $21.1 million in January.
Contracts are huge for IonQ, as it needs this funding to continue developing quantum computers, which aren’t commercially viable right now. However, its CEO, Peter Chapman, believes that time is coming soon.
He stated that their #AQ 36 system is already being used by customers today to create value and that its #AQ 64 (releasing in 2025) and #AQ 256 (releasing in 2026) systems will allow the company to produce “near-term business value.” Perhaps one of his biggest predictions is that quantum AI will vastly outperform the classical AI we know today. As a last projection, he believes that IonQ will be profitable and generate sales of around $1 billion by 2030.
That’s a bold projection, but if quantum computers become the way of the future, this isn’t such a far-fetched idea. So, is IonQ the stock to buy?
IonQ isn’t the only competitor in this space
IonQ isn’t the only one in this space. Other quantum computing pure-plays, like D-Wave and Rigetti Computing, as well as legacy computing companies Alphabet, Nvidia, IBM, and Microsoft, all compete in this space.
With us being so far away from widespread quantum computing usage, it’s difficult to see who the true leader is. With IonQ winning multiple large contracts for its work, I think it’s a clue for investors as to which company is currently leading. However, there could be a significant breakthrough from one of the competitors (just look at Google’s Willow Chip) that could cause IonQ to fall behind in this race. Furthermore, these companies have massive resources, so they don’t need external contracts to fund their development.
Over the past 12 months, IonQ’s revenue (basically how much money it gets from contracts) was $37.5 million. Alphabet produced $72 billion in free cash flow over the past 12 months, so it could easily outspend IonQ in this quantum computing arms race if it wanted to.
As a result, going all-in on an upstart company like IonQ could be a huge mistake, as it could be a massive loser as easily as it wins the quantum computing race. So, what should investors do?
A basket approach is the best way to tackle this industry, as it allows you to spread the risk among multiple companies. So, the best strategy here is to own stocks like IonQ or D-Wave in a smaller amount alongside investments like Alphabet and Nvidia.
Quantum computing will be a generational investment opportunity, but there is too much competition and uncertainty to declare IonQ the winner of this massive investing trend.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet and Nvidia. The Motley Fool has positions in and recommends Alphabet, International Business Machines, Microsoft, and Nvidia. 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.
