Nvidia (NVDA +2.33%) has been the undisputed king of AI investing, although some competition has started to emerge recently. However, these are traditional computing companies, not quantum computing businesses like IonQ (IONQ 1.20%). Quantum computing stocks have heavily sold off in the past few days, making them far more attractive than they were just a few weeks ago.
With quantum computing potentially threatening traditional computing's dominance in the artificial intelligence sector, is IonQ the better investment over the long term versus Nvidia?
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IonQ made a bold prediction about its future
IonQ's CEO Niccolo de Masi stated in an interview that he believes quantum processing units will eventually replace graphics processing units (GPUs) in accelerated computing applications. He compared the rise of quantum processing units to how GPUs replaced CPUs in situations where more computing power was needed.
NYSE: IONQ
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That's a bold proclamation, but it could have huge ramifications if it pans out. Nvidia is the world's largest company and is putting up huge growth figures because its GPUs are in such high demand for AI computing applications. If IonQ could rise to replace Nvidia, that would result in monstrous returns that would turn meager investments in IonQ into more than a million dollars.
But is this realistic?
There's no guarantee IonQ will be the winner
The AI computing market is massive. Nvidia projected that global data center capital expenditures will total $600 billion in 2025, but rise to $3 trillion to $4 trillion in annual spending by 2030. That's a monstrous market, and if Nvidia can keep its market share, it will be slated to deliver massive growth for investors.
NASDAQ: NVDA
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But could IonQ take some of that massive buildout figure? Likely not. IonQ and its quantum computing peers point toward 2030 as the turning point for the commercial viability of quantum computing. This means that most quantum computing companies won't see significant sales until this time frame. That's already after the bulk of the AI infrastructure has been built out, so it's unlikely that IonQ will be able to have a massive effect on the AI arms race, although it could allow companies to push into the next frontier of AI in the years following.
From a market standpoint, one of IonQ's competitors, Rigetti Computing (RGTI 3.04%), notes that it expects a $15 billion to $30 billion annual market to emerge between 2030 and 2040. IonQ believes the total addressable quantum computing market will reach about $87 billion by 2035 (that's a cumulative figure). Nvidia generated $41 billion in data center GPU sales alone during Q2, so it's clear that Nvidia will likely generate more money than these quantum computing companies even a decade from now.
Furthermore, there's no guarantee that IonQ's approach will be the ultimate winner. While IonQ is a leader now, it's possible that it loses that leadership position over the net in the future.
Additionally, there are many potential competitors in the quantum computing arms race, and companies like Alphabet have nearly unlimited resources to spend on this technology, unlike IonQ. It's an uphill battle for IonQ, but if it pans out, it will still make investors a ton of money, although there's no guarantee of success.
Between Nvidia and IonQ, I think there's a clear winner as to which stock is the better AI computing play: Nvidia. Nvidia is still rapidly growing and making money from each GPU it sells. We're still a ways out from quantum computing becoming relevant, even though IonQ looks like a promising pick in this space. IonQ is a long-shot investment that could pay off, but if the AI market is as large as Nvidia says it is (alongside many other companies involved in this space), Nvidia will pay off.
