The field of quantum computing is exciting. Quantum computers use atomic particles to perform complex calculations beyond the abilities of today's supercomputers, positioning them to revolutionize numerous industries.
Many businesses are battling to produce technology that overcomes the challenges inherent in quantum machines. Two for investors to consider are IonQ (IONQ -4.36%) and Quantum Computing Inc. (QUBT 0.67%), which also refers to itself as QCi.
These companies use different techniques to build quantum devices. IonQ employs ions to perform calculations while QCi utilizes photons.
Between IonQ and QCi, one proves to be a better quantum computing investment right now. To understand which one and why, let's dive into both businesses in more detail.
Image source: Getty Images.
Where Quantum Computing Inc. is at today
Current quantum computers are prone to calculation errors due to the delicate nature of atomic particles, preventing these machines from scaling up, and limiting their widespread use. Many quantum companies try to minimize errors by subjecting particles to freezing temperatures in expensive, bulky cryogenic equipment.
Quantum Computing Inc. takes a different approach. It embraces the inherent chaos of harnessing these particles in a technique called entropy quantum computing. This method allows QCi's machines to operate at room temperature, use less power, and integrate with ordinary computer servers.
Despite these advantages, its technology hasn't taken off. In the first quarter, QCi produced revenue of just $39,000. However, its Q1 operating expenses totaled $8.3 million. This chasm between income and expenses eventually will become a death knell for the business if sales don't pick up.
But perhaps the company is turning a corner. In April, it sold one of its computers to a large automotive manufacturer, and in July, it secured a purchase valued at $332,000 from a major U.S. bank. The bank's sale is significant considering QCi produced revenue of $373,000 in all of 2024.
IonQ's financial ups and downs
IonQ's technology also operates at room temperature by using lasers to carefully control ions. It's been winning customers and growing revenue, a sign that its approach shows promise in surmounting quantum computing's shortcomings. In 2024, sales reached $43.1 million, up from the prior year's $22 million.
But in Q1, the company's revenue of $7.6 million was flat year over year. This underwhelming result was not a good sign for a business with a Q1 operating loss of $75.7 million.
Then in Q2, IonQ's sales trajectory changed once again. This time, revenue came in at an impressive $20.7 million, nearly double the prior year's $11.4 million. Part of this massive increase came from the company's recent acquisitions, as it works toward building a quantum computer network akin to the infrastructure underpinning today's internet.
However, the acquisitions resulted in additional expenses, which catapulted IonQ's Q2 operating costs to $181.3 million, a huge increase over 2024's $60.3 million. Consequently, its Q2 operating loss ballooned to $160.6 million versus a loss of $48.9 million in the previous year.
To bolster its finances, IonQ executed a $1 billion equity offering in July. This adds to the $1.3 billion in total assets the company exited Q2 with, while total liabilities stood at $168.2 million.
Choosing between IonQ and Quantum Computing Inc.
In deciding between these two quantum computing companies, one factor to weigh is share price valuation. This can be assessed through the price-to-sales (P/S) ratio, which measures how much investors are willing to pay for every dollar of revenue generated over the trailing 12 months.
Data by YCharts.
IonQ's P/S multiple is substantially lower than QCi's, indicating it's a better value. In fact, QCi's P/S ratio is so high, its stock looks overpriced.
IonQ's superior sales growth and share price valuation make it a better investment over QCi in the emerging field of quantum computing. That said, buying IonQ stock carries risks, especially in the current macroeconomic climate, which could see inflation rise as a result of the Trump administration's aggressive tariff policies.
IonQ's operating expenses are already accelerating, and the economic environment could drive those costs higher. While its balance sheet sports the funds to maintain operations in the short term, the longer-term picture remains murky.
Whether IonQ's tech can achieve the quantum computing dominance it seeks is far from certain, and both it and QCi face large competitors with deep pockets, such as Microsoft, which is developing its own quantum computing solution. So only investors with a high risk tolerance should consider IonQ stock.
