Turning a $10,000 initial investment into $1 million is an incredibly difficult task. A stock must rise a hundredfold to achieve that, which requires extraordinary circumstances that few companies ever achieve on the public markets. However, if you look at which companies have achieved this performance level, they tend to be involved in an industry that has dramatically evolved from a niche use case to a widespread one.
One recent example is Nvidia, the GPU maker. GPUs, or graphics processing units, were mostly used for gaming PCs or other intense computing tasks like engineering simulations or drug discovery. While this was a sizable market, it was nothing compared to the unprecedented use of GPUs for training and running artificial intelligence (AI) models. This caused a $10,000 investment in Nvidia's stock to reach over $2.6 million in a decade, making it one of the most successful investments of all time.
Another area where investors see tremendous potential is quantum computing, which could provide the next step in computing power necessary to run AI models with unprecedented abilities. Quantum computing could also be used in other cases where traditional computing isn't great, such as weather modeling or logistics networks.
Although this field is full of strong competitors, IonQ (IONQ +3.63%) is a commonly picked company. But does IonQ have the potential to transform $10,000 into $1 million? Let's take a look.
NYSE: IONQ
Key Data Points
IonQ's approach has vaulted it into a market leadership position
Currently, IonQ is valued around $10 billion. So if you were to invest $10,000 into the stock today, it would need to rise to $1 trillion in value to increase in value by 100-fold. That's an incredibly tall task, especially with quantum computing still attempting to prove its relevance.
The biggest issue with quantum computing right now is that it's inherently inaccurate. Traditional computing uses bits, which transmit information as exactly 0s or 1s. Quantum computing utilizes qubits, which derive information from a trapped ion (like IonQ) or another particle. The information derived from this particle or ion is best described as a probability of the calculation being a 0 or a 1, leading to errors in the solution.
Image source: Getty Images.
There are multiple ways that companies have attempted to solve this issue, but the leading solution is having qubits interact with each other to ensure the correct answer is reached. Some approaches have used qubits to interact with their neighbors, but IonQ uses an all-to-all approach, where every qubit in the system interacts with every other qubit. This has allowed IonQ's technology to achieve better than a 99.9% 2-qubit gate fidelity, a commonly used accuracy measure in the industry.
As a result, IonQ is seen as an industry leader, which is why the stock already has a lot of hype built into it. However, many companies are vying for quantum computing supremacy, and IonQ's chances of success are far from certain. So could it transform $10,000 into $1 million if IonQ wins the quantum computing arms race?
IonQ would need a monopoly to achieve this growth
IonQ points to an $87 billion total addressable market by 2035. It's nearly impossible for one company to capture an entire market, especially with so many viable competitors in this space. But for argument's sake, let's say that IonQ could generate $87 billion in revenue by 2035. How would that rank it among the current $1 trillion companies? Right in the mix.
TSLA Revenue (TTM) data by YCharts
So for IonQ to transform $10,000 into $1 million over the next decade, it would likely have to capture the entire projected market and deliver that level of revenue year after year. That's extremely unlikely to happen, so the odds of IonQ achieving this feat are probably zero.
However, it could still be a solid investment if IonQ wins the quantum computing arms race. But investors must keep in mind that IonQ has no backup plan. If another company wins the quantum computing race, IonQ's stock will be worthless. That doesn't mean you need to avoid IonQ entirely, but position sizing should be appropriate for the risk, likely no more than 1% of your total portfolio value.
