IonQ (IONQ 0.15%) stock posted another day of huge gains in Thursday's trading. The quantum-computing company's share price closed out the daily session up 13.5% and had been up as much as 17% earlier in the day.
NYSE: IONQ
Key Data Points
IonQ's big gains today are connected to Nvidia's (NVDA 1.56%) recent third-quarter earnings report, which saw the artificial intelligence (AI) leader post sales, earnings, and forward guidance that beat Wall Street's expectations. Despite slipping early in the day's trading, Nvidia stock ended the day's trading up 0.5% -- and its strong quarterly performance and share price gains helped power momentum for other growth stocks.
Nvidia once again powers gains for IonQ stock
Nvidia has been this year's hottest and most influential megacap growth stock. The company has become increasingly central to momentum for the stock market at large, and its performance often has an outsized impact on valuations for growth-dependent stocks. The AI frontrunner's Q3 beats and encouraging forward guidance helped support bullish momentum for growth stocks and speculative technology plays today.
In Q3, Nvidia posted non-GAAP (adjusted) earnings per share of $0.81 on revenue of $35.08 billion. For reference, the average analyst estimate had called for the business to report adjusted earnings of $0.75 on sales of $33.16 billion. Nvidia's guidance for revenue of $37.5 billion in the fourth quarter of its current fiscal year also surpassed the average Wall Street estimate's call for sales of $37.08 billion in the period.
Nvidia stock initially slipped after the Q3 release because some investors were looking for even bigger performance beats, but its quarterly report and forward guidance had immediately beneficial valuation impacts for many other tech stocks. IonQ stock rallied earlier in the week after the company announced that it had successfully completed a demonstration of its technologies in conjunction with Nvidia's CUDA-Q software platform for hybrid quantum computing, and the quantum stock enjoyed another surge in conjunction with Nvidia's strong quarterly results.
What's next for IonQ stock?
Following today's gains, IonQ stock is up 164% across 2024's trading. The company now has a market capitalization of roughly $7.1 billion and is valued at approximately 170.5 times this year's expected sales.
As a company with a core business that hinges on delivering revolutionary technologies, it doesn't make sense to put too much weight behind traditional valuation metrics. On the other hand, IonQ's valuation highlights the likelihood that long-term performance for the quantum-specialist's stock will likely have somewhat of a binary outcome.
If IonQ delivers major commercial breakthroughs with quantum computing, the stock will likely post explosive gains and deliver huge returns for investors who take a buy-and-hold approach to shares at today's prices. On the other hand, the company's share price is poised to crater if bets on revolutionary technologies don't pay off.
