Investing early in a leading developer of a cutting-edge technology has enabled some individuals to amass fortunes in the past. Could buying shares of quantum computing pioneer IonQ (IONQ +3.89%) set you up for life? The answer is... maybe.
There's no question that IonQ is sizzling hot right now. But here's what it will take for the stock to generate the kind of returns that could be life-changing.
NYSE: IONQ
Key Data Points
IonQ's promise
Some technologies that are heralded as revolutionary don't live up to the hype. However, quantum computing is one that truly could be worthy of that description. And IonQ's promise is intertwined with the potential for quantum computing.
As powerful as today's classical computers are, they're limited. Some calculations can't be done, at least in any reasonable timeframe, with even the fastest supercomputers available today. Quantum computers, though, offer the possibility of performing calculations in seconds and minutes that could require millions of years for current computers.
We're not talking about esoteric uses that help only a few mathematicians and theoretical scientists. Quantum computing could transform artificial intelligence (AI), drug discovery, optimization used in logistics and manufacturing, materials science, simulation, weather forecasting, and more. By 2030, quantum computing could be a $65 billion market -- and that's likely to be only the tip of the iceberg.
IonQ is well positioned to claim a significant share of that market. The company already sells viable quantum computers available on all three major cloud platforms. Its trapped-ion technology offers lower error correction overhead, something that's extremely important in quantum computing, compared with rival approaches. IonQ's systems can also run at room temperature instead of requiring super-cooling, a big advantage.
IonQ's challenges
However, we also need to acknowledge IonQ's challenges. The most immediate one is that the company remains unprofitable. And its losses are widening -- $48.5 million in 2022, $157.8 million in 2023, and $331.6 million in 2024.
As promising as early quantum computers developed by IonQ are, they're nowhere close to the point of fulfilling the potential of the technology. In particular, future quantum computers must be able to use a much higher number of qubits than current systems.
IonQ is betting the farm on its trapped-ion architecture. However, there are several other promising quantum computing architectures, including superconducting qubits, neutral atom quantum computing, photonic quantum computing, and topological qubits.
On a related note, the company faces some well-heeled competition. Google parent Alphabet, Amazon, IBM, Microsoft, and Nvidia could be formidable rivals. So could other up-and-coming quantum computing companies such as D-Wave Quantum, Quantum Computing Inc., and Rigetti Computing.
Image source: Getty Images.
Setting you up for life?
Another reason the best answer to the question about whether buying IonQ stock can set you up for life is that the amount required to set one person up for life could be different from the next person. The magic number won't always be the same.
If $1 million is your target, the odds that IonQ will set you up for life are low. To grow an initial investment of $10,000 into $1 million would require that the company deliver a hundredfold return. I think it's possible that IonQ's market cap could skyrocket from around $10.5 billion today to over $1 trillion, but is it probable? No. While some stocks do manage to generate such staggering returns, most don't.
Perhaps the better question to ask is whether investing in IonQ could make you a lot of money over the next 10 to 20 years. I think the answer to this question is also "maybe." However, it's a much stronger maybe. IonQ still faces plenty of hurdles. However, if its trapped-ion architecture can fulfill its potential, the stock will be a huge winner -- even if it doesn't set you up for life.
