Is IonQ Your Potential Key to Achieving Millionaire Status by 2035?
Is IonQ Your Potential Key to Achieving Millionaire Status by 2035?
Finding a business that can turn a modest investment into a millionaire is a rare find, but it's out there, sometimes lurking in plain sight. Take, for instance, investing $10,000 in *Nvidia* a decade ago, which is now worth an astonishing $2.71 million. This quest for millionaire-maker investments is thrilling, even though hits are rare.
Looking towards the future, investors might be interested in the next big millionaire-maker, and many are turning their eyes towards quantum computing. Companies like *Alphabet have made headlines with their Willow quantum computing chip, but there are others that are purely investment opportunities. One such name is IonQ (IONQ* 10.84%), but is it capable of making a millionaire out of you by 2035?
IonQ Secures Important Contracts to Finance Its Research
Let's discuss traditional computing versus quantum computing for a moment, without delving too deep. Regular computers operate using bits, transmitting information as either 1s or 0s, resulting in a binary process. Quantum computers, on the other hand, employ qubits, which represent the likelihood of information being a 1 or 0. This creates an infinite chasm of information between these two entities, pushing computing power to new heights.
The potential for quantum computing is staggering, and IonQ's numerous deals last quarter underscore this point. It announced a collaboration with AstraZeneca to expedite drug discovery and development. It also entered into a deal with engineering simulation firm Ansys to introduce quantum computing to that industry. However, the icing on the cake was a $54.5 million research contract with the U.S. Air Force Research Lab. These contracts bring revenue to IonQ, aiding in the funding of its research and development.
IonQ's revenue soared 102% in Q3, but all of this came from contracts, not sales of quantum computers. All quantum computing companies are still in the development phase, as the practical application of the technology has yet to be realized. Consequently, it's no surprise that IonQ is currently operating at a loss.
In Q3, IonQ generated $12.4 million in revenue, but posted a net loss of $52.5 million. This deep unprofitability raises questions about how long it can continue without turning a profit. At the end of Q3, IonQ had around $360 million in cash and short-term investments, providing it with a solid financial foundation.
However, to justify its existence, IonQ needs to start turning a profit. But is it too much of a long shot for investors?
Investing in IonQ is similar to buying a lottery ticket
The winner in the quantum computing race hasn't been determined yet. While Alphabet recently made a breakthrough, IonQ might make one tomorrow. There are also heavyweights in this space, such as IBM, Microsoft, and Nvidia. While it won't be a winner-takes-all race, IonQ is competing against some giants that would consider IonQ's $50 million quarterly loss a rounding error.
However, IonQ has an edge due to its contract with the Air Force Research Lab and its smaller size, making it more agile.
However, there's no guarantee that IonQ will emerge victorious. If it does, the stock could potentially make investors millionaires. But, that's a long shot. If you're interested in investing in quantum computing companies, here's a suggestion:
- Create a basket of stocks by investing in a few small quantum computing companies and some of the larger players.
- Keep position sizing modest for long-shot stocks like IonQ.
If you follow this approach, you'll gain exposure to the winner without being negatively impacted if IonQ falls behind. If I invested in IonQ, I'd likely place it at no more than 0.5% of my overall portfolio due to the significant risk involved. But, if it turns out to be successful, that tiny 0.5% investment could quickly become a substantial portion of my portfolio.
In the realm of quantum computing investments, IonQ's recent contract with the U.S. Air Force Research Lab is a significant finance boost, aiding in the company's research and development efforts.
Given the current state of quantum computing companies, investing in IonQ can be compared to purchasing a lottery ticket. While there's potential for substantial returns, the risk is substantial as well, making it advisable to consider diversifying investments across various quantum computing companies.