When investors buy growth stocks, they obviously expect those tickers to gain value. They don't necessarily have an upside target in mind though. They're simply plugging into a compelling growth story.
Every now and then, however, a millionaire-making prospect comes along. IonQ (IONQ -39.00%) is one of only a handful of such opportunities available right now. Here's what you need to know.
Quantum computing is the next big thing ... but it's already here
Don't misread the message. There are no guarantees when it comes to picking stocks, and this one is no exception. A modest investment in IonQ could lead you to a seven-figure stash. Or, it could be a complete bust. It might end up somewhere in between. It's just too soon to say. But the current bullish argument for this stock holds quite a bit of water even if the stock brings above-average risk.
But first things first.
You likely know that all modern-day computers are built around a binary system consisting of digital ones and zeros. Different combinations of ones and zeros become numbers and letters, which are turned into complex commands, which are then turned into interactive images, automated functions, and more. And for years this binary basis of all mainstream computing was adequate.
Time and technology have finally caught up with the limitations of this approach though. So-called quantum computing is a whole new computing paradigm with stunningly more power than even the best binary-based platforms offer.
But what is it exactly? In simplest terms, quantum computing is the practical use of the quantum mechanics that make an atom an atom. Whereas a traditional computer can only process one zero at a time (although it can do so very quickly), subatomic particles can occupy a space around an atomic nucleus in near-infinite combinations nearly simultaneously. Think of each of these combinations as a calculation being made at the same time countless other calculations around the same nucleus are being made.
End result? An exponentially faster computing platform, on the order of 100 million times faster than the device you're using right now. Jobs that would take today's ordinary computers years to complete can now be done in a matter of seconds by quantum computers.
IonQ is in the right place at the right time
So what's IonQ's part of the story? It makes quantum computers. In fact, it's one of only a few names working on this tech, and the only so-called "pure play" investment in this space.
In light of this status, the company's market cap is a surprisingly modest $11 billion.
Credit the relative newness of its hardware, mostly, along with its lack of profitability. IonQ's only been monetizing its tech since late 2021, and has only been driving meaningful commercial revenue since early last year en route to a 2024 top line of just over $40 million. And like so many other companies of its age and kind, IonQ is neither profitable nor expected to be anytime soon.
Data source: StockAnalysis.com. Chart by author.
But, that's neither the point nor necessary ... at least not yet. This potential millionaire-making stock is a compelling speculative trade right now based on where the quantum computing business is going, and where IonQ is apt to be as a result of this industry's growth five to 10 years in the future.
Market research outfit Precedence Research paints an eye-popping picture, predicting the global quantum computing market is poised to grow at an average annualized pace of more than 30% between now and 2034. IDTechEx suggests the same compound growth rate all the way through 2045, suggesting several doublings of this market's size are in store over the course of the next couple of decades. That's the core of this stock's millionaire-making potential.
Interested investors won't need to wait nearly that long to see more progress from IonQ though. The analyst community is calling for top-line growth of 100% this year, accelerating last year's projected revenue growth of roughly 92%. Next year's growth should be just as impressive, and, perhaps more noteworthy, should start cutting into lingering losses stemming from continued investments in its tech that's not yet monetized as much as it's eventually going to be.
In other words, all-important scale is on the horizon. This stock's already starting to perform well in anticipation of that swell. Look for more of the same in the foreseeable future.
A competitive, investment-worthy edge
That's the bullish thesis anyway. Just keep it in perspective. The quantum computing industry is still very young, and largely unproven. The application of this science is also somewhat limited in scope. Although such a high-performance solution has obvious applications in fields like artificial intelligence, drug development, cybersecurity, and financial modeling, it's neither practical nor necessary for everyday activities like checking email, shopping online, or playing a video game.
Then there's the prospect of newer, deeper-pocketed competitors like Alphabet, which recently unveiled its own in-house designed quantum chip. Called Willow, this chip promises to raise expectations for all quantum computing names including IonQ.
In many regards though, smaller IonQ is still ahead of its bigger rival. Chief among its competitive advantages is the fact that it's already commercialized and boasts some impressive developmental partners including the Oak Ridge National Laboratory, engineering software company Ansys, and the U.S. Air Force Research Lab. It's arguable that higher-value users of quantum computing technology are more interested in working with a smaller, more focused player like IonQ than a consumer-facing brand that's building a quantum computing arm that's secondary to its core business.
Just bear in mind it could take years for IonQ to deliver millionaire-making gains. Much could happen in the meantime to derail the company. That's why you'll want to keep close tabs on it for as long as you own it.
