IONQ Stock Prediction

Computers are so deeply embedded in modern life that they manage the operations and safety functions of vehicles, power mobile devices, and they enable an endless array of communication, productivity, and connectivity software. 

With the help of faster, more powerful computers, scientists have made extraordinary advances in medicine, and there is now computer-driven technology that comes very close to thinking for itself. Machine learning is an exciting field, and artificial intelligence is achieving new capabilities every year.

The computing power available today is much faster and more efficient than it was ten years ago. That gives researchers, innovators, and entrepreneurs reason to hope for ongoing performance improvements. Most assume that the growth in power and performance will continue at a steady rate in the years to come.

For those who typically work outside the world of computing, the truth about the future of computing performance is somewhat shocking. Computers aren’t going to continue developing at a steady pace over the next decade or two. The computing world is on the cusp of something far more powerful — something capable of completely transforming how complex computing tasks are completed. 

That something is quantum computing, and one company is leading the way in this emerging field: IonQ. In the short time since it began trading publicly, IonQ’s stock price has already increased by more than 150 percent. Many investors and analysts think that is just the beginning. 

When the potential applications of quantum computing are considered, any IonQ stock prediction feels like an understatement. Some investors and analysts believe IonQ is the next Apple, Amazon, or Microsoft, and they are confident that this stock is heading straight up.

IonQ: The World’s Most Powerful Quantum Computer

There is a short and long answer to the question, “What does IonQ do?” The short answer is that the company has developed the world’s most powerful quantum computer. As the first quantum computing company to trade publicly, IonQ is currently the only opportunity for investors to include a pure quantum computing asset in their portfolios. 

Understanding the importance of the world’s most powerful quantum computer and why that matters for IonQ’s stock price requires a much longer answer to the question, “What does IonQ do?” It begins with a brief explanation of quantum computing and how this technology differs from the traditional machines in widespread use today.

Traditional computers perform mathematical calculations at a rapid rate through the use of binary signals — the 0s and 1s that make up computer code. The binary signals are measured in bytes, so the more bytes of code, the longer and more complex the arithmetic.

As the code becomes more complicated, the computer needs more processing power to complete the task, and completion takes more time. If the code is exceptionally complex, as it is for self-driving cars and artificial intelligence, traditional computers may struggle to meet the demand for processing power in a reasonable amount of time. 

One type of calculation has proven particularly problematic for traditional computers: combinatorics. This involves examining all of the different ways to combine and arrange members of a group to achieve a goal. The more items in the group, the more ways they can be combined. 

The best example of a combinatorics problem is guessing passwords. If a password is only four characters long and all of the characters are letters, there are 26 members of the group. With the right program, a traditional computer could run through all possible combinations of those 26 letters to find the correct password. 

As numbers, special characters, and upper/lowercase letters are introduced to the password, the possible combinations rise to a staggering number. A traditional computer can still run through all possible combinations, but it works in a linear fashion — it tries the first combination, then the second, and so forth. No matter how quickly it tests each combination, the amount of time necessary to examine such a large group of items is so long as to be useless.

Quantum computing operates on an entirely different set of principles. Rather than the linear calculations of traditional computers, quantum computers record and store data using a non-binary method; qubits. That means quantum computers aren’t limited to linear calculations.

To put it another way, these systems can complete combinatorics calculations very quickly. That matters to industries that are trying to solve some of the world’s most pressing problems.

IonQ Customers

Quantum computers aren’t available for mainstream consumers — yet — but several industries are anxious to harness their power in pursuit of previously unimagined solutions. For example, chemical and bioengineering companies need to accurately model molecules that may eventually mean new, more versatile materials and transformative drug therapies that could prevent or treat diseases like cancer, autoimmune disorders, and Alzheimer’s.

By definition, Artificial Intelligence (AI) requires machines to have the ability to make complex decisions quickly and accurately. For the moment, that means testing and discarding options in a linear manner using traditional computing. When quantum computing is introduced in AI science, it will expand the capabilities of “thinking” machines and improve their ability to make fast, precise decisions. 

There are endless applications for quantum computing in manufacturing, financial services, cybersecurity, and others, which means IonQ’s list of partnerships and customers is rapidly expanding.

In recent months, IonQ announced projects with companies like Accenture, the University of Maryland, and Softbank, paving the way for significant growth. 

IonQ Business Model

IonQ is on a mission to take quantum computing mainstream, and it has a multi-pronged approach to reaching its goal.

First, IonQ is pursuing a Quantum-Computation-as-a-Service model, delivering access to quantum computing through Amazon Web Services (AWS), Microsoft Azure, Google Cloud Marketplace, and IonQ Quantum Cloud.

Second, the company is forming partnerships with leaders in a variety of industries to expand its reach.

Third, it is creating a plan to distribute service through value-add resellers, which encourages the development of innovative applications for quantum computing. That will ultimately push demand and drive revenue for the company.

In short, the company’s business model is heavy on collaboration, which has proven effective for other emerging tech companies.

IonQ Growth Drivers

Because the demand for faster, more accurate computing is virtually limitless, IonQ is poised for growth as it develops its products’ capabilities. Management has voiced their commitment to continuous improvement, and the primary goal over the next few years is smaller, faster, more accurate quantum computers.

The company expects to deploy modular quantum computers that can be networked together by 2023, and the plan is to achieve a broad quantum advantage by 2025. That’s sooner than nearly anyone in the quantum computing industry expected.

By 2030, the total addressable market will likely reach $65 billion, representing a compound annual growth rate (CAGR) of 56 percent. IonQ has no true competitors at this time, leaving it to command an overwhelming majority of the market.

IonQ Competitors

Certainly, IonQ isn’t the only company pursuing quantum computing, but it is by far the most successful.

Its current technology is 32,000x more powerful than other quantum systems, and that technology is well-protected by an extensive patent portfolio.

As the first pure-play quantum computing company in the market, IonQ has the first-mover advantage. Early investors include Amazon, Samsung, Lockheed Martin, Bosch, and Hewlett-Packard, which has opened doors to prestigious partnerships.

Even if competitors eventually duplicate IonQ’s technology, they will find pulling market share away from IonQ to be a tremendous challenge.

IonQ Revenue Growth

On November 13th, 2021, IonQ released its third-quarter results, the first earnings report since it began trading publicly through a special-purpose acquisition company (SPAC) merger on October 1st.

IonQ did not report any revenue at all, though sales came in at $0.2 million. However, that was fully expected, and investors were not alarmed. In fact, the stock price increased by 35 percent in a matter of hours. 

In its investor presentation published just before the SPAC merger, IonQ outlined the following revenue projections: 

  • 2021 – $5 million
  • 2022 – $15 million
  • 2023 – $34 million
  • 2024 – $60 million
  • 2025 – $237 million
  • 2026 – $522 million

The revenue growth is based, in part, on the number of systems IonQ will bring online over that period; two by 2023, seven by 2024, 17 by 2025, and 33 by 2026.

IonQ Earnings Growth

For now, every penny that IonQ receives from investors goes directly into expenses like system builds, research and development projects, and staffing. However, management expects to see losses turn to profits as revenues continue on their growth trajectory.

Specifically, IonQ projects the following results for EBITDA:

  • 2021 – $42 million
  • 2022 – $56 million
  • 2023 – $63 million
  • 2024 – $67 million
  • 2025 – $61 million
  • 2026 – $272 million

In its third-quarter 2021 results, IonQ announced a loss of $14.8 million, which represents a year-over-year increase from 2020’s third quarter of $3.5 million. Again, this isn’t considered especially problematic given that the company is still in the very earliest stages of its growth. 

IonQ Stock Prediction

Though IonQ is not reporting any revenue right now and has substantial losses, investors continue to show optimism about its future. Analysts appear optimistic as well, though perhaps not overly so. All of the three that weighed in on IonQ’s prospects agreed that IonQ stock is a buy. 

With that said, they aren’t expecting astonishing increases in IonQ’s stock price over the next 12 months. The average came in at $26 per share, and the highest projection was just $28. Of course, IonQ has already exceeded that figure, so analysts may adjust their guidance in the coming months.

How High Can IonQ Go?

The trouble with trying to get in on the ground floor of the next Apple, Amazon, or Microsoft is that many more companies fail than succeed. For every investor who made the right call on Apple, Amazon, or Microsoft just after their IPOs, hundreds bet on startups that never made a dime. 

New companies are an inherently risky investment because it is far more likely that something will go wrong than it is that the company will see millionaire-making returns. However, as risky bets on startups go, it appears that IonQ is one of the best possible choices.

IonQ has exclusive possession of technology capable of transforming the world through faster, more accurate computing, and there is unlimited demand for access to that technology. The company has already gained the confidence of industry-leading tech, research, and manufacturing organizations, and investors applauded the company’s decision to go public.

How high can IonQ go? It’s impossible to say. But in the years since their IPOs, Apple, Amazon, and Microsoft have gained 394,575 percent, 213,545 percent, and 341,170 percent, respectively. If IonQ follows in their footsteps, those who buy IonQ stock today may see substantial returns in the years to come.

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.