Quantum computing is often considered the next frontier for the tech sector. Unlike traditional computers, which still store zeros and ones separately in binary bits, quantum computers store them simultaneously in qubits. That's why quantum computers can process massive amounts of data at a much faster rate than their traditional counterparts.
However, quantum computers are still primarily used for niche government and research projects because they're bigger, more expensive, and consume a lot more power than traditional servers and mainframes. They also tend to output a higher percentage of errors.
Image source: Getty Images.
But over the next few years, smaller, denser, and more power-efficient quantum processing units (QPUs) and systems could make them more practical for mainstream computing applications. Two closely watched companies that aim to achieve those goals are D-Wave Quantum (QBTS 1.46%) and IonQ (IONQ +0.09%).
Over the past 12 months, D-Wave's stock surged more than 2,530% as IonQ's stock surged nearly 800%. Should investors buy either of those hot quantum computing stocks today? Let's review their key differences, growth rates, and valuations to decide.
The key differences between D-Wave Quantum and IonQ
D-Wave and IonQ both design their own QPUs with different technologies. D-Wave's QPUs are powered by electrons (subatomic particles with a negative charge) which are sped up in "superconducting loops" to process data. These chips are easier to manufacture than other types of quantum chips, but they're also the most expensive to operate because they can only function in cryogenic environments. International Business Machines and Rigetti Computing also use superconducting chips in their quantum computers.
By contrast, IonQ's QPUs run on ions (individually charged atoms) that are trapped inside electromagnetic fields and manipulated with lasers. These units are more delicate and more expensive to produce than D-Wave's superconducting chips, but they can operate at room temperatures. Yet, IonQ's systems aren't necessarily cheaper to operate than D-Wave's cryogenic systems over the long run, since their fragile lasers still need to be constantly maintained and calibrated.
NYSE: QBTS
Key Data Points
D-Wave and IonQ both build full quantum computing systems and serve up their own quantum computing power as cloud-based services. However, D-Wave specializes in "quantum annealing" services, which help large organizations optimize their digital workflows, supply chains, and logistics networks. It accomplishes that by pushing those processes through its systems and identifying the ones that consume the least power as the most efficient ones.
IonQ doesn't provide any quantum annealing tools. Its "universal gate" computing is designed for a broader range of cryptography, simulation, and machine learning purposes. In other words, it has the potential to serve a much wider range of industries than D-Wave.
NYSE: IONQ
Key Data Points
How fast are D-Wave and IonQ growing?
Over the next two years, D-Wave's growth should be driven by its new Advantage2 quantum system, which can solve complex problems roughly 25,000 faster than its prior system while consuming less power. IonQ's upcoming launch of its fourth system, the Tempo, could also draw in more customers. Here's what analysts think could happen.
|
Metric (Estimated) |
2025 |
2026 |
2027 |
|---|---|---|---|
|
D-Wave revenue (in millions) |
$24.6 |
$38.3 |
$71.0 |
|
Growth (YOY) |
178% |
56% |
85% |
|
IonQ revenue (in millions) |
$91.3 |
$171.1 |
$314.7 |
|
Growth (YOY) |
112% |
87% |
84% |
Data source: Marketscreener. YOY = Year-over-year.
We should take those rosy estimates with a grain of salt, but D-Wave and IonQ could both experience explosive growth as the nascent quantum computing market expands. However, both companies will likely stay deeply unprofitable for the foreseeable future.
|
Metric (Estimated) |
2025 |
2026 |
2027 |
|---|---|---|---|
|
D-Wave net loss (in millions) |
($287.5) |
($222.7) |
($249.3) |
|
IonQ net loss (in millions) |
($479.9) |
($590.2) |
($551.6) |
Data source: Marketscreener.
That's a bit worrisome when so much growth has already been priced into their high-flying stocks. With a market cap of $8.22 billion, D-Wave trades at 116 times its projected sales for 2027. IonQ, which is worth $19.89 billion, trades at 63 times its 2027 sales.
The better buy: IonQ
Both of these speculative quantum stocks could crash during a market downturn. But if I had to pick one over the other, I'd invest in IonQ because its systems don't require constant cryogenic refrigeration, it faces fewer direct competitors in the ion-driven quantum market, it serves a broader range of customers, and it's trading at a lower forward price-to-sales ratio.
D-Wave is still a promising company, but its narrower focus and tougher competitive headwinds make it tough to justify its sky-high valuations.
