Buying a lottery ticket can be tempting. Winning hundreds of millions of dollars can be life-changing, and Powerball tickets only cost a couple of bucks. However, the odds of winning are stacked against you, with the chance of hitting the Powerball jackpot being a dismal 1 in 292 million.
Despite the long odds, people spend a shocking amount on lottery tickets each year. In 2023, people bought over $100 billion worth of tickets. That quite simply is a bad "investment."
The lottery drains cash from millions of players with little payback each year, and the cost adds up over time. Instead, that money could go toward investing. Stocks have generated strong annual returns over the years, but still, only half of Americans actually own stocks.
While investing in an exchange-traded fund (ETF) that tracks the S&P 500 is a great strategy, the lottery statistics show that some people want a little more juice. With this in mind, I think if you really want a swing-for-the-fences kind of bet, IonQ (IONQ -1.27%) is a better option than buying a lottery ticket.
Betting on quantum computing
For those unfamiliar with IonQ, the company is trying to become the leader in the emerging field of quantum computing. While the technology is widely considered to be many years away from commercial applications, it has the potential to become the next big technology after artificial intelligence (AI).
Quantum computing has the potential to process information in a fraction of the time as today's computers. It does this by using what are called quantum bits, or qubits. While traditional computer bits have either a value of 0 or 1, qubits can have multiple values at the same time. This is called superposition.
If you've ever caught an episode of The Big Bang Theory, you might remember the running joke about Schrödinger's cat. It's an old thought experiment where a cat is sealed inside a box, and until you actually open the box, the cat is considered both dead and alive at the same time. As strange as that sounds, that idea of being in two states at once, called superposition, is the core concept that makes quantum computing possible.
For its part, IonQ uses trapped-ion technology, which basically means it works with actual atoms to serve as qubits. That's important because each atom is identical, so they don't degrade or vary the way some artificial systems do. This results in qubits that are more stable and hold information longer, with fewer errors.
One of the biggest obstacles facing quantum computing is that the technology is error-prone, especially with the more qubits it uses. IonQ's trapped-ion technology can perform complex calculations with fewer qubits than other systems because its qubits are more stable and reliable. Meanwhile, it's also developed a technology called CliNR, which is short for Clifford Noise Reduction, to reduce the logical error rate. Combined, this has helped it achieve some of the best error rates in the quantum computing space.
With trapped-ion technology, IonQ also doesn't have to completely design new chips to increase computing power. Instead, it can just add more ions, which serve as its qubits, into the system. That makes progress more predictable, while also making it cheaper to scale.
Image source: Getty Images.
Building an early moat
IonQ isn't looking to just build quantum computers; it is looking to take a page out of Nvidia's book and control the entire quantum computing ecosystem. While Nvidia is best known for its graphics processing units (GPUs) that are used to power AI, its wide moat comes from its CUDA software platform and NVLink interconnect system.
IonQ is trying to do something similar within both software and networking. It's making compilers, error-correction tools, and other systems that organizations will need if they want to get the best out of their quantum computers. Meanwhile, it's acquired Lightsynq for its networking technology and Capella to add a satellite network.
At the same time, the company is well-funded, so it can afford to make smart acquisitions. It has more than $1.6 billion in cash and no debt, and it's already built a 100,000-square-foot research and manufacturing facility. IonQ is much more than a company just chasing a big dream; it's operating from a position of strength.
A better bet
Buying Powerball tickets might be tempting, but they aren't an investment. Make no mistake, buying IonQ stock is speculative. However, it's an investment that is tied to real technology, actual customers, and a company building out an ecosystem in a field that could be worth trillions of dollars down the line.
If you're going to take a long-shot bet, it makes more sense to do it in a place where the odds can tilt your way over time. IonQ might not become the next Nvidia, but it's got the cash and the vision to at least have a fighting chance. That's a much smarter bet than buying a lottery ticket with 1 in 292 million odds.
