Following comments made by Nvidia ( NVDA ) CEO Jensen Huang in early January, IonQ ( IONQ ) stock fell along with other names in the quantum computing sector. But, despite the free-falling stock price and inflation, I’m indifferent. This stock is expected to be a quantum revolution just around the corner, but the reality is that investors will have to be very patient. The stock still looks overpriced, and it’s operating in a crowded space, so not every company makes it. As such, I don’t think now is the time to buy IonQ stock.
IonQ is a pioneering quantum computing company that uses bound-ion technology to develop quantum computers. Unlike traditional approaches, the IonQ method uses a laser to manipulate individual atoms as qubits, enabling longer and more sophisticated calculations with fewer errors. It’s all incredibly exciting, and judging by the company’s strong set of announcements by the end of 2024, this approach positions IonQ as a leader in the quantum computing industry—at least among small caps.
However, recent comments from NVIDIA CEO Jensen Huang have sent quantum computing stocks, including IonQ, into a tailspin. During Nvidia’s CES 2025 presentation, Huang suggested that practical quantum computers could be 15 to 30 years away. It’s a disappointing timeline, but perhaps the reality check the stock market wanted.
After Huang’s comments, IonQ’s stock fell about 40%, along with other quantum computing companies’ steep declines. The market response reflects the speculative nature of the quantum computing sector and the significant gap between current capacity and commercial viability.
Part of the reason I’m a bear is that IonQ operates in a very crowded field of quantum computing, where many companies may struggle to survive in the long term. The quantum computing landscape is littered with both established tech giants and innovative startups, all vying for dominance in this nascent field. IBM ( IBM ), Google ( GOOGL ), Amazon ( AMZN ), Microsoft ( MSFT ), and Intel ( INTC ) are investing heavily in quantum technology, along with big names like Rigetti ( RGTI ) and D-Wave Quantum ( D-Wave Quantum ). with players. QBTS), the competition is tough.
Gartner’s bullish cycle suggests that while there will be winners in quantum computing, there will also be plenty of losers – right now, it seems we’re headed for the Gartner Basin of Disillusionment, after inflated expectations have peaked. Some organizations inevitably lose money when they adopt approaches that are difficult to measure or simply execute their strategies poorly. This is especially concerning for a company like IonQ, which, despite its innovative trap ion approach, faces significant challenges in terms of business and profitability.
Additionally, pure-play quantum computing stocks face a number of challenges, including talent and funding, ahead of the late 2024 bull run and freefall. While IonQ’s cash reserves provide a good runway, the company continues to lose money. However, a $54.5 million deal with the US Air Force Research Laboratory to produce quantum network hardware by the end of 2024 boosted the company’s credentials.
As mentioned, IonQ is expected to remain unprofitable, which reinforces patience as it is difficult to make a valuation-based thesis when profitability is several years away. Despite this, the revenue forecast is promising.
The company’s revenue is projected to grow significantly, from $41.6 million in 2024 to $314.6 million in 2027, on an upward trend. This represents an impressive compound annual growth rate (CAGR) of approximately 96% over a four-year period.
As a result of this impressive earnings growth, IonQ’s forward price-to-sales ratio is expected to decrease from 167.9x in 2024 to 22.2x in 2027, indicating that the share price may become more attractive over time. However, this is still very expensive compared to other parts of the market, and investors should note that the company’s continued losses may be a risk, although the bottom line is expanding rapidly.
On TipRanks, IONQ comes in as a moderate buy based on four buys, two holds and zero sells assigned by analysts over the past three months. The average price target for IONQ stock is $37, indicating a potential downside of about 34%.
See more IONQ analyst ratings
I’m bullish on IonQ despite new technology and promising revenue growth forecasts. The long-term trajectory of quantum computing trading combined with the stock’s current valuation makes it a speculative game.
IonQ operates in a highly competitive sector where many players do not have a chance to survive, and its ongoing losses only magnify its risks. While analyst ratings highlight some optimism and the company’s partnerships are certainly interesting, broader market challenges and uncertain profitability cannot be ignored.
Until IonQ shows clear progress toward scalability and commercial viability, it’s a high-risk investment only suited to incredibly patient, long-term investors. Therefore, on this occasion I will try to look beyond the analyst’s target.
