Quantum computing is advancing gradually from academic pursuit to early commercialization, and according to the market research firm The Quantum Insider, between now and 2035, the technology could add more than $1 trillion to the world economy.
However, progress in this field does not involve just building more qubits. The biggest challenges in quantum computing are associated with reducing errors, correcting errors, and improving reliability, scalability, and deployability. This, of course, must all be done while also controlling costs and managing power usage.
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Quantum computing with even a small number of truly entangled qubits (a multi-qubit state where individual qubits do not have independent states) can prove far superior to classical computers in simulating complexity and ranges of possibilities. This is precisely why governments and enterprises have been testing quantum approaches to solving unusually complex problems that are beyond the capacity of conventional supercomputers.
Currently, most progress toward the commercialization of quantum computing has been made through cloud-based and hybrid workflows -- in other words, quantum computing combined with classical computing -- rather than standalone quantum computing systems. To capitalize on this opportunity, many investors are assessing two pure-play quantum computing stocks that have been dominating the headlines: IonQ (IONQ 1.81%) and D-Wave Quantum (QBTS 4.34%).
Which one is a better buy? Let's find out.
IonQ
IonQ is rapidly scaling its business, as evidenced by its 222% year-over-year revenue growth to $39.9 million in the third quarter. Management now expects 2025 revenues to be in the range of $106 million to $110 million, up from its previous guidance range of $82 million to $100 million. IonQ also exited the quarter with remaining performance obligations (a measure of contracted backlog) of $141.1 million, offering impressive visibility into its future revenues.
NYSE: IONQ
Key Data Points
The company also boasts a strong balance sheet, with a pro forma cash balance of $3.5 billion (as of Oct. 14) and no debt. Hence, while the company is not yet profitable, it does not face near-term funding risks.
IonQ builds universal, gate-based quantum computers, which use sequences of quantum gates to perform calculations using trapped-ion qubits -- charged atoms held in place with electromagnetic fields. The company has already achieved 99.99% two-qubit gate fidelity, meaning that its calculations involving two qubits are accurate 99.99% of the time.
The company's Tempo system has also reached an algorithmic qubit score that indicates it can execute complex and deep computations comparable to a system with 64 high-quality algorithmic qubits. Although these milestones do not directly translate into near-term commercial success, they represent significant progress in addressing the core challenge of error reduction in quantum computing. IonQ is also aiming to scale its quantum systems to 256 physical qubits by the end of 2026 and up to 10,000 physical qubits by the end of 2027.
D-Wave Quantum
D-Wave Quantum is a leading pure-play developer of quantum annealing systems, which are best used for finding optimal or near-optimal answers for optimization problems rather than for more general-purpose quantum computing. The company's systems are gradually gaining a bit of traction in the marketplace, and its revenues soared nearly 100% year over year to $3.7 million in the third quarter.
The company reported an impressive non-GAAP gross margin of 77.7%, up 10.5 percentage points on a year-over-year basis. Its balance sheet is also solid, with $836.2 million in cash on hand.
NYSE: QBTS
Key Data Points
D-Wave Quantum is already seeing some success with hybrid quantum technology, which combines quantum annealing with classical computing, in commercial use cases. Customers such as BASF, North Wales Police, and Japan Tobacco's pharmaceutical division have reported impressive results in addressing their operational challenges with these hybrid solutions.
Recently, it secured a 10 million euro commitment from Swiss Quantum Technology, which is leasing access to 50% of the capacity of one of D-Wave's Advantage2 annealing quantum computers for five years, with deployment expected in 2026. The contract includes an option that allows Swiss Quantum Technology to purchase the system at a later date.
The application of D-Wave's technology to real-world problems today, rather than just experiments, gives it a significant competitive advantage. Yet its systems are not witnessing robust enterprise adoption at scale.
Which is better?
IonQ is pursuing a capital-intensive strategy to become a dominant player in universal, fault-tolerant quantum computing. If successful, its quantum computing systems could tackle large-scale complex problems across industries and functions. The company's revenue base is already significantly larger than D-Wave's, while its contract backlog also highlights continued traction in 2026. IonQ also has a higher cash balance, which is a significant positive in a capital expenditures-heavy industry like quantum computing.
Although D-Wave's quantum annealing technology has already demonstrated value in early commercial proofs of concept, it has more limited use cases. Management has been working on developing a gate-model quantum computing program as well, but it may be several more years before a commercial-grade fault-tolerant system comes into focus. This may restrict D-Wave's long-term commercial scale.
IonQ is trading at about 204 times sales, which is undeniably a steep premium. However, with gate-based quantum computing being widely expected to provide previously inaccessible solutions to advanced problems in materials science, cryptography, and advanced simulation, investors may be ready to pay this premium for IonQ. In comparison, D-Wave Quantum trades at an even more elevated valuation multiple of about 344 times sales.
Considering all the factors, IonQ seems to offer a better risk-reward profile for long-term investors.
