/Technology%20abstract%20by%20TU%20IS%20via%20iStock.jpg)
While artificial intelligence (AI) may have dominated the market 2024, quantum computing burst onto the scene at the end of the year thanks to Willow, Alphabet’s (GOOGL) new groundbreaking quantum computing chip. As the pinnacle of computational power, quantum technology promises to tackle challenges in drug discovery, financial modeling, and AI that today’s supercomputers can’t touch.
With the global quantum computing market projected to skyrocket from $65 billion in 2030 to an astounding $850 billion by 2040, according to Boston Consulting Group, its transformative potential is impossible to ignore. Amid such massive hype over quantum computing, IonQ (IONQ) has emerged as a winner. Since its public debut through a SPAC merger in October 2021, shares of this quantum computing startup have been a rollercoaster ride, soaring to $31 just a month later, only to plummet to $3 by late 2022.
But 2024 marked a turning point for IonQ. The company revolutionized quantum computing by making its quantum hardware accessible on Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, fueling triple-digit revenue growth in the third quarter. Adding to its momentum, IonQ's strategic partnerships with leading pharmaceutical players, major investments from giants like Amazon (AMZN) and Lockheed Martin (LMT), and a landmark $54.5 million U.S. Air Force contract to develop quantum networking technology further solidify its commercial viability.
While most recently, Nvidia (NVDA) CEO Jensen Huang’s remarks, suggesting practical quantum computers may still be 20 years away, sparked a wave of skepticism and sent IonQ’s stock tumbling almost 40% on Jan. 8, the company’s fundamentals tell a different story. With unmatched partnerships, dominance in cloud accessibility, and a robust innovation pipeline, IonQ remains at the forefront of quantum computing’s evolution. So, keeping all these factors in mind, should investors buy, sell, or hold this stock in 2025?
About IonQ Stock
Maryland-based IonQ (IONQ) is at the forefront of developing quantum computers that aim to tackle the world’s most complex challenges with a vision to transform business, society, and the planet. Built on over 25 years of cutting-edge academic research, IonQ specializes in trapped-ion quantum computing, bringing this groundbreaking technology from the lab to real-world applications across industries and academia.
Unlike traditional computers that use binary bits of zeros and ones, quantum computers leverage "qubits" to store both zeros and ones simultaneously, enabling them to process data at a much faster rate. However, quantum systems are bulky, costly, and prone to errors. IonQ’s trapped-ion technology is shrinking these quantum units from feet to inches, promising more compact, affordable, and accurate quantum computers for tomorrow. Presently, the company's market cap stands at $6.5 billion.
Even after factoring in a sharp pullback of almost 44.5% from its recently achieved 52-week peak of $54.74 on Jan. 7, triggered by Nvidia CEO Jensen Huang’s comments casting doubt on the speed of quantum computing advancements, shares of this quantum computing startup are up roughly 170% over the past year, far outshining the broader S&P 500 Index’s ($SPX) 24.4% return over the same time frame. In fact, over the past three months alone, the stock delivered electrifying returns of roughly 230%, dwarfing the SPX’s less-than-1% gain during the same period.
In spite of its recent pullback, IonQ's meteoric rise over the past few months has driven its stock to a steep price tag, trading at an eye-watering 169.43 times sales. While such a lofty valuation might raise eyebrows and spark concerns about overvaluation, it also reflects the intense optimism investors have about the company's future. This premium price suggests that many are willing to take a bold bet on IonQ's transformative growth story, anticipating big rewards as quantum computing evolves.
A Closer Look at IonQ’s Q3 Financials
After IonQ’s impressive Q3 earnings report on Nov. 6, which blew past Wall Street's top-line projections, the stock soared by over 34% in the following session. Despite being in the early stages of quantum development and posting a wider-than-expected loss of $0.24 per share, the company’s jaw-dropping 102.1% year-over-year revenue growth, reaching $12.4 million and beating estimates by a notable 17.2%, sent investors into a frenzy.
In addition to its impressive revenue growth in Q3, IonQ made major strides with $63.5 million in new bookings, including securing the largest U.S. quantum contract of 2024, a $54.5 million award from the U.S. Air Force Research Lab. The company also announced the launch of a new quantum application development center, formed in collaboration with pharma giant AstraZeneca (AZN), while forging a groundbreaking partnership with Ansys (ANSS) to introduce quantum power to the $10 billion computer-aided engineering industry.
These strategic moves showcase IonQ’s growing influence and deepening commercial foothold in the quantum space. IonQ's financial cushion remains strong, with $382.8 million in cash, cash equivalents, and investments as of Sept. 30, 2024. This substantial reserve provides the company with a solid foundation to continue fueling its ambitious quantum computing advancements and strategic partnerships.
Encouraged by the company’s strong Q3 performance, management upped IonQ’s revenue forecast for fiscal 2024, now projecting it to range between $38.5 million and $42.5 million, with Q4 expected to contribute between $7.1 million and $11.1 million. The company also reaffirmed its bookings outlook for the entire year, anticipating it to land between $75 million and $95 million.
What Do Analysts Expect for IonQ Stock?
Despite limited coverage, Wall Street’s outlook on IonQ remains optimistic, with a consensus “Moderate Buy” rating overall. Of the five analysts offering recommendations, two advise a “Strong Buy,” one recommends a “Moderate Buy,” and the remaining two suggest a “Hold.”
While the stock has already soared beyond its average analyst price target of $26, the street-high target of $45 suggests that IONQ could still climb as much as 48.8% from current levels.
Overall, IonQ is undoubtedly a thrilling stock for growth-hungry investors, driven by its groundbreaking advancements in quantum computing, impressive revenue growth, and expanding commercial partnerships. However, with its sky-high valuation and recent volatility, it’s not a stock for the faint of heart. That said, for those who can stomach fluctuations, IonQ emerges as an ideal investment candidate to capitalize on the future of quantum technology.
