Nvidia has been the defining investment in the artificial intelligence (AI) race, with hardware that's the industry standard, giving the company a huge market share. However, there's another trend looming that could eclipse Nvidia's rise: quantum computing.
Some of these stocks have already surpassed Nvidia's growth rate. IonQ (IONQ +2.31%), one of the leaders in quantum computing, has actually outperformed it since the AI race began in 2023. The chipmaker's stock has risen an impressive 1,240%, while IonQ's is up 1,510%.
If IonQ's technology becomes the standard in quantum computing -- much as Nvidia's has in accelerated computing -- it could be poised for decades of explosive growth, making it a great stock to buy now.
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Leading the industry in computing accuracy
Quantum computing has the potential to eclipse the processing power of traditional computing. This is why there are several companies vying for supremacy in the technology: A gold mine awaits whatever company can make the world's first commercially viable quantum computer. Two roadblocks are in the way of that right now: accuracy and scale.
Accuracy is obviously a predominant factor to consider. An inaccurate computer is a useless one, and until quantum computers can achieve acceptable accuracy levels, they won't be a useful technology.
IonQ is striving for more precise calculations, and it currently holds the record as the most accurate quantum computer, at 99.99% two-qubit gate fidelity. This metric measures how accurate a calculation is after passing through two processing gates, and is an industry-standard test.
Most companies have yet to achieve 99.9% two-qubit gate fidelity, so IonQ is a whole order of magnitude ahead of the competition. That's a big deal, giving it leadership in the industry.
The next test for IonQ is scalability. In the press release announcing the achievement of 99.99% fidelity, the company also said that it has reached the base-level accuracy it was aiming for before working on scaling up its computer. The goal is a computer with millions of qubits by 2030, which would allow it to bring a commercially viable device to market.
Time will tell how this pursuit ends up, but IonQ is clearly in the lead. Still, is it a better investment than Nvidia?
NYSE: IONQ
Key Data Points
IonQ's success depends on its dominance
Nobody knows what the quantum computing market will look like a decade from now. However, one bold proclamation from IonQ's CEO was that he believes its products could replace graphics processing units (GPUs), which Nvidia and its peers make.
Nvidia has said it has several hundred billions of dollars in orders for its advanced computing chips over the next few months, and if IonQ could replace that market in the next decade, its growth would be incredible. But there is no guarantee that it can.
Quantum computing is still unproven, and all the competitors in the sector have a long way to go before anyone of them launches a commercially viable version. IonQ may stumble along the way and lose its leadership position, causing the stock to go to $0. Or it could thrive in a multibillion-dollar market and generate 100-fold returns over the next decade.
IonQ is a high-risk, high-reward stock, and investors must understand that it has a better chance of going to $0 than it does of being a success story. There's nothing wrong with investing in stocks like this, but you must realize that they will be incredibly volatile, rising and falling alongside the market's appetite for risk.
I think the company is a worthy investment, but investors should be patient while the stock price is trending down. There will be better entry points along the way for IonQ stock, and patience will pay off in the long run.
