The past three months have been pretty eventful for quantum computing stocks, with some of the most volatile of investors seeing.
When did it start? AlphabetGoogle has announced a major quantum breakthrough with its Willow chip. The announcement on Dec. 9 will allow Willow’s chip quantum computers to correct errors better than ever before — a major milestone in Google’s quantum computing roadmap.
Shares of quantum computing Added to this ad. The future seems to have arrived. But NiveaJensen Huang and Meta forumsMark Zuckerberg threw cold water on the party. Like these two tech CEOs“Very useful” quantum computers are more than a decade away. In fact, Huang thinks it could be 15 to 30 years.
After these comments, quantum computing shares tumbled. And with so many conflicting opinions floating out there, Peter Chapman is planting his own flag in the sand. Chapman is the CEO of quantum computing company. IonQ(NYSE: IONQ) And setting realistic goals for the schedule.
Because of the novel way quantum computers work, they are theoretically more powerful than classical computers. If this is true, it’s surprising that people like Jensen Huang and Mark Zuckerberg say that quantum computers won’t be useful for at least the next 10 years.
As it turns out, the usefulness of quantum computers today is limited because the continuous error rates are still very high. To be clear, error rates are improving. There are also error-correcting algorithms that can be used to make corrections. Moreover, Google’s Willow chip is a breakthrough in this area. But there is still limited applicability due to error rates.
Because of this, investors want to know how soon the time of quantum computers has arrived. IonQ’s Chapman developed his own timeline. In the year By 2030, the CEO believes his company will generate revenues of nearly $1 billion and be profitable.
Chapman is calling for astronomical growth. IonQ expects to generate about $40 million in revenue by 2024. If it generates $1 billion in revenue by 2030, it represents a compound annual growth rate (CAGR) of more than 70% from now until then.
For perspective, Navid is one of the fastest growing stocks ever and has only achieved a CAGR of nearly 60% over the last five years. In other words, IonQ requires a higher level of development. Of course, IonQ is starting from a very small revenue base, making growth much easier for Nvidia. But this timeline should get investors’ attention.
Let’s hit the brakes before we get too excited. In my opinion, IonQ’s quantum price timeline shows how far the technology can progress while simultaneously showing how far it will be six years from now.
Going back to the Willow chip announcement, Google itself laid out six major issues that quantum computing technology must achieve before it has “meaningful applications.” Willow’s chip shows progress in progress for error correction. But Google admits it still has more to go. And then he still needs more discoveries with quantum gates control First of all, quilts.
IonQ’s $1 billion revenue goal is impressive. But if the technology is hitting its full potential, the market should be much bigger than this, 1 billion dollars is relatively small in comparison. This suggests that more meaningful industrial growth (in dollar terms) will come after 2030.
When it comes to IonQ stock, getting on the rail for 2030 is expensive. The company has a market cap of $8.5 billion as of this writing. This means that the stock is valued at 8.5 times Capacity After six years of sales. For perspective, some investors believe that 8.5 times sales is too expensive to track trailing 12-month sales. Paying that much for a 2030 sale is very difficult.
Moreover, this high price is what investors pay if so IonQ has achieved its 2030 goals. But investors shouldn’t forget that Chapman was CEO when IonQ went public in 2021. At that time, management projected 2024 revenue of $60 million and an earnings before interest, tax, depreciation and amortization (EBITDA) loss of $67 million. But it has an adjusted EBITDA loss of $74 million for the first three quarters of 2024 and expects full-year revenue of only about $40 million, downgrading its 2021 guidance.
In other words, take the IonQ 2030 timeline with a grain of salt because past timelines are short.
In my opinion, IonQ’s business is poised for sensational growth, but the stock is still a risky bet today. For many investors, the best course of action may be to wait for the quantum computing industry to pass several milestones before choosing stocks in the space.
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Susan Frey, an executive at Alphabet, is a member of the Motley Fool’s board of directors. Randy Zuckerberg, former director of market development and Facebook spokesperson and sister of Meta Platforms CEO Mark Zuckerberg, is a member of the Motley Fool’s board of directors. John Watt It has no place in the said shares. The Motley Fool has positions and recommends Alphabet, Meta Platforms, and Nvidia. The Motley Fool has Disclosure Policy.
