In the realm of quantum computing, few stocks are better picks than IonQ (IONQ 1.88%). Why? IonQ is a clear leader in the most important part of quantum computing: accuracy. Computational accuracy is the one item standing in the way of quantum computing becoming a commercially viable technology, and betting on a company that currently owns the world record for the most accurate quantum computer is a smart strategy.
While artificial intelligence (AI) may be the hot technology now, quantum computing is on the horizon, and IonQ could provide explosive returns to investors if they're early on the trend.
Image source: The Motley Fool.
IonQ is taking a different approach to quantum computing
Because quantum computing isn't a standardized field, there are several ways quantum computing companies are developing their technologies. At their core, all of them utilize particles to perform quantum calculations, but how those particles are controlled is where each competitor's approach varies.
IonQ uses trapped-ion technology. This involves trapping an ion in a magnetic field to isolate it from background noise. This is just one qubit, and commercially viable quantum computers will need thousands of qubits to process the size of workloads necessary to deliver meaningful business impacts. Right now, most companies in this field (including IonQ) are working toward getting 100-plus-qubit systems up and running. This will open the gateway to small workload opportunities, but quantum computers can still make a huge difference in these areas.
NYSE: IONQ
Key Data Points
We're already seeing growing demand for IonQ's products and services. In the first quarter, IonQ's revenue grew 755% year over year to nearly $65 million. Management also increased revenue guidance for the full year. During Q4, it told investors to expect between $225 million and $245 million. Now, that range is $260 million to $270 million. One of the highlights in the quarter was selling its first 256-qubit system. That's a major deal and showcases that IonQ's technology is nearing commercial relevance.
There's really not a lot to dislike about the current trajectory of IonQ's business, but what kind of market opportunity awaits?
The quantum computing market could be massive
The term "once-in-a-generation" needs to be carefully applied, as sometimes these generational investment opportunities seem to come around once every five years. However, I truly think it's warranted here. Quantum computing will be a major leap forward in our computing technologies, and could help advance several industries into the next era. Classical computers are great at many tasks, but could benefit from the improvements that quantum computing provides. Fields like logistics and AI will see major improvements from quantum technologies. Additionally, cybersecurity will need to deploy quantum-based security solutions, as bad actors may also be able to get their hands on a quantum computer.
Last year, McKinsey & Company released a report that detailed how it believes the quantum computing industry trajectory will go. By 2035, it estimates that the quantum computing market could be worth up to $72 billion. That's a major market opportunity created essentially out of thin air, and if IonQ can capture a nice chunk of that, it could deliver jaw-dropping returns.
However, there are also several potent competitors in this field, like IBM, Alphabet, and Microsoft. All three of these companies have nearly unlimited resources to throw at quantum computing, and are unlikely to be shut out of the final market opportunity. It all comes down to who can provide the best product at a reasonable price that delivers solid results. We're still a long way from knowing that, but with the start that IonQ has, I'm confident it will be a top stock to own in this major investment opportunity.
