The hot field of artificial intelligence (AI) helped the stock market reach new highs in 2024. Quantum computing is another emerging technology with the potential to do the same.
Quantum machines can revolutionize industries because they're far more powerful than today's computers. For example, Google parent Alphabet's new quantum chip completed a calculation in five minutes that would take a supercomputer 10 septillion years to complete. That's more than the age of the universe.
Alphabet is just one of several companies involved in quantum computing. A prominent pure-play quantum company to consider investing in is IonQ (IONQ 1.71%). Its share price increased 265% over the past 12 months.
That stupendous growth would have earned you $1 million if you had bought enough shares when IonQ hit a 52-week low of $6.22 last August. The stock could help you retire a millionaire if it can repeat the past year's share price performance over the long haul. Here's a deeper look into the company to see if it has what it takes to do so.
IonQ notched a series of successes that caused shares to surge. In January, IonQ added Busan, South Korea's technology hub, to its impressive list of customers that includes the United Arab Emirates, pharmaceutical giant AstraZeneca, and the U.S. Air Force Research Lab (AFRL).
Its customer wins drove third-quarter revenue to $12.4 million, which represents year-over-year growth of 102%. Through the first three quarters of 2024, IonQ sales hit $31.4 million, nearly double 2023's revenue of $15.9 million.
The company expects its 2024 sales to finish between $38.5 million and $42.5 million. That's an impressive increase of at least 75% over 2023's $22 million.
Along with strong sales, IonQ exited Q3 with an outstanding balance sheet. Total assets were $497.9 million compared to $62.2 million in total liabilities. It also had a cash pile of $382.8 million.
Rising revenue, strong financials, and prominent clientele were ingredients in IonQ's share price increase. Underpinning all this is the strength of IonQ's technology.
One of the biggest challenges with quantum machines is that they're prone to calculation errors. Last year, IonQ introduced an error correction process thousands of times more efficient than competitors', according to the company.
IonQ also claims it was the first to commercially network quantum computers. Networking computers is what makes today's AI possible, so IonQ's feat is an important milestone in unlocking unprecedented quantum computing power.
To strengthen its position in this area, in November the company acquired Qubitekk, a quantum networking company. IonQ is also working with AFRL to implement a quantum computing network.
Last year, IonQ opened the first U.S. manufacturing facilities dedicated to producing quantum machines. This enables the company to accelerate building quantum computers to keep up with customer demand.
Right now, a lot is going well for IonQ. But how it performs over the long haul determines whether investing in it is going to help you retire a millionaire.
One factor to consider is that, despite its success, the company is not profitable. Its Q3 net loss totaled $52.5 million. That's an increase from the prior year's net loss of $44.8 million. Rising losses indicate IonQ's path to profitability is not on the horizon.
CEO Peter Chapman declared the company will become profitable and sales will hit $1 billion by 2030. That's massive revenue growth from 2024's estimated sales of around $40 million, and would likely cause IonQ stock to rise.
But risks abound. One of the biggest risks is the difficulty working with the quantum particles that make these machines so powerful. The previously mentioned task of correcting calculation errors is costly, and prevents quantum devices from scaling the same way as traditional computers.
Companies in the space are racing to perfect the technology to reach quantum advantage. This is the point at which today's computers can no longer keep pace with quantum devices. Forecasts estimate that will happen after 2030 at the earliest, while fully scalable machines won't exist until 2040 or beyond.
Perhaps that timeline fits your retirement plan, but a lot can happen in the interim. IonQ is competing against the likes of Alphabet for a piece of the quantum computing pie. The Google parent has far deeper pockets than IonQ, having generated Q3 sales of $11.4 billion.
Given the disruptive potential of quantum computing, it's possible for IonQ's share price to rise enough over time that shareholders can retire millionaires. But considering the years, perhaps decades, before quantum computers reach widespread use, only investors with a high risk tolerance should consider IonQ stock.
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