Due to its huge upside potential, quantum computing is set to become a lucrative area of investment. Some investors view this area as their second investment opportunity NVIDIAthe stock turned a $10,000 investment a decade ago into more than $2 million today.
One stock I am paying attention to is Ion Q (NYSE: IONQ)looks like the current leader in the industry. I’m optimistic about its prospects, but I’m also cautious due to the unknown nature of this industry.
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There is no one-size-fits-all approach in the world of quantum computing. There are several ways to implement this technology, but IonQ takes a somewhat unique approach. Its trapped-ion technology is different from the superconducting technology typically used in quantum computing, but it produced impressive results.
IonQ’s accuracy scores are among the best in the world, and its success stems from the architecture used in quantum computers. Customers have recognized this success, and IonQ generates the most revenue of any pure-play quantum computing business.
In the fourth quarter, IonQ’s revenue increased 429% year-over-year to $62 million. While not all revenue comes from system sales, it generates some revenue from early systems used for research. Next year, IonQ expects to earn about $235 million in revenue, up from $130 million this year. This is huge growth and shows how the industry is starting to embrace the idea of leveraging quantum computing. It also shows that the technology has advanced enough to be useful in research applications – a gateway to commercial use.
It will take some time for the quantum computing market to develop, but McKinsey & Company believes it will be a huge market by 2035. They estimate that the quantum computing market could be worth between $28 billion and $72 billion annually. This is a huge market that IonQ needs to capture. While there could be many winners, IonQ’s precise leadership position will allow it to establish first-mover status and make it difficult to exit as other competitors emerge.
However, there are still significant risks here. IonQ’s approach may be working now, but Can is a currently unknown obstacle that prevents it from performing as well as its peers. Furthermore, quantum computing may never advance to the point where it is commercially viable. Both of these are real risks that could prevent IonQ stock from becoming the next great tech stock.
