IonQ (NYSE:IONQ) might already be a millionaire-maker growth stock for some investors. That’s because it’s up around 1,900% since the start of 2023!
Eagle-eyed investors who got in at around $3 back then could be sitting on a seven-figure goldmine. As I type now though, the IonQ share price is up at $69.
Might it still make me rich investing today? Here’s my take.
Rapid growth
Let’s start with some things I like about IonQ. Firstly, it’s a pioneer in the field of quantum computing, a technology which most experts say has the potential to completely revolutionise multiple industries.
Unlike traditional computers, which process information one step at a time (even if very fast), quantum computers use qubits. These can be 0 and 1 at once, allowing quantum computers to take on problems that classical machines would take centuries to crack. Hence the revolutionary potential.
IonQ builds quantum computers and offers access to them via the cloud (Quantum-as-a-Service). So researchers can run quantum workloads on IonQ hardware through cloud platforms.
Another thing I like here is that the company is already generating revenue, and this is growing rapidly. For 2025, revenue is expected to increase 112% to $91.3m, then nearly double again next year to around $171m.
Also, after a recent $1bn equity raise, the firm has about $1.6bn in cash on the balance sheet. So it’s well capitalised to both invest for growth and carry out acquisitions.
In Q2, IonQ snapped up three firms in its quest to build the backbone of a global quantum network.
Overall, there’s a lot to be excited about here. As the nascent quantum computer market takes off over the next decade, IonQ’s revenue could grow exponentially. Some investors see similarities with an early Nvidia (an exciting prospect indeed).
Reality check
Stepping back, though, I do see some things that give me cause for concern. The first is that quantum computers seem a few years from going totally mainstream because they are still prone to errors.
Moreover, I don’t really understand the company’s technology, if I’m honest. Now, that’s not to say that I think you have to understand every single aspect of a company’s technology before investing. For example, the inner workings of Nvidia’s GPUs or Rolls-Royce‘s small modular reactors.
But IonQ uses trapped ions (charged atoms) as qubits. These are held in place by electromagnetic fields and manipulated with lasers. This is different to competitors like Google and IBM, which use superconducting qubits.
Which approach is superior? Why have Google and IBM — tech giants with vast intellectual and financial capabilities — gone down the superconducting route? These are questions I cannot answer. So I’m unsure whether IonQ has a durable competitive advantage.
A third issue I have is that the company is expected to be loss-making for some time. That’s not surprising given the emerging nature of the industry and the heavy investments needed to capitalise on the growth opportunity. But in a market downturn, these stocks are very vulnerable to massive selling pressure.
This is especially the case when IonQ is trading at 245 times this year’s forecast sales. At this valuation, I think the stock is currently in a speculative bubble rather than a potential millionaire-maker.
As such, I will focus on other opportunities for my portfolio.
