The bubblicious enthusiasm for quantum computing stocks, initially catalyzed by Google’s (GOOG) launch of the “Willow” quantum chip, has been popped by the Nvidia (NVDA) CEO’s Jensen Huang comments earlier this week at the Consumer Electronics Show (CES) that quantum computing is still a decade away. As a result, IonQ (IONQ), an industry leader in quantum computing, saw its shares dip roughly 39% over the past few days.
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Despite the wild meme-like ride over the past month, the company continues to make strides in technology and strategic acquisitions. IonQ’s recent purchase of Qubitekk strengthens its position in the quantum networking space. The company also focuses on product innovation, recently launching IonQ Quantum OS, a new operating system, and IonQ Hybrid Services, which boost businesses’ quantum computing performance. Despite the challenges, IonQ reported healthy financial standing, suggesting it’s well-positioned to continue to be a leader in pursuing this groundbreaking technology.
Making Significant Progress
IonQ is in the vanguard of developing trapped-ion quantum computers, aiming to bring this innovative technology into commercial, industrial, and academic use. The company’s quantum systems are based on ionized atoms, allowing for long-duration, sophisticated, and accurate calculations, surpassing the performance of any computer built to date. It has become a recognized leader in space with the first-ever quantum hardware that integrates major cloud platforms, quantum programming languages, and quantum software developer kits.
In partnership with Oak Ridge National Laboratory (ORNL), IonQ has announced a technological breakthrough demonstrating a new approach to scalable quantum computing. The collaboration allowed the development of a novel hybrid quantum algorithm based on the Quantum Imaginary Time Evolution (QITE) principle. The new noise-tolerant method allows near-optimal solutions for complex combinatorial optimization problems on IonQ’s commercially available hardware.
Advancing in Tech and in Acquisitions
IonQ has delivered its first datacenter-ready quantum computer, IonQ Forte Enterprise, outside the United States to QuantumBasel in Switzerland. The #AQ36 Forte Enterprise system is now online, performing at a record algorithmic qubit count of #AQ36, double the computational space for running quantum algorithms compared to the promised #AQ35.
The company also announced the launch of its quantum operating system, IonQ Quantum OS, and a new suite of capabilities named IonQ Hybrid Services. The iterative improvements reduce on-system classical overhead by over 50%, reduce cloud and network overhead of workloads by 85%, improve accuracy in an expanded error mitigation and compilation suite by up to 100x, and offer enhanced calibration, automation, and control software and firmware for optimal qubit and gate performance.
Finally, the firm announced the acquisition of Qubitekk, a prominent quantum networking company. The merger brings Qubitekk’s team, advanced technology, and extensive patent portfolio into IonQ’s operations, solidifying IonQ’s position in quantum networking and computing. The acquisition also expands IonQ’s customer base, creating more booking and revenue opportunities. It also increases its quantum networking hardware and security patent portfolio to over 600 U.S. and internationally issued and pending patents.
Bookings Point to Growing Revenue
The company has reported strong financial performance for the third quarter, with new bookings soaring to $63.5 million, exceeding the higher end of previous estimations. This boost in revenue includes a significant $54.5 million deal with the United States Air Force Research Lab to develop quantum system hardware. The company also announced its first-ever planned partnership to develop quantum applications with AstraZeneca (AZN).
IonQ’s third-quarter revenue stood at $12.40 million, reflecting 102% growth from the preceding year’s Q3 earnings of $6.1 million. However, the company also reported a net loss of $52.5 million and an Adjusted EBITDA loss of $23.7 million for the same quarter.
As of the quarter’s end, the company reported cash, cash equivalents, and investments valued at $382.8 million.
Management has issued forward guidance, estimating earnings for the year’s last quarter of $7.1 million to $11.1 million. For the 2024 financial year, management projects an increase in revenue to between $38.5 million and $42.5 million while maintaining its original expectations for bookings of $75 million to $95 million for the full year.
A Strong Buy Rating
The stock has been whipped about by significant volatility spikes and sports a beat of 3.79. Yet, despite the recent drop, the stock is still up 161% over the past year. It trades near the middle of its 52-week price range of $6.22 – $54.74 and shows mixed technicals.
Analysts following the company have been bullish on IONQ stock. Based on the recent recommendations of five analysts, IonQ is rated a strong buy overall. Their average price target for IONQ stock over the next 12 months is $38.75, representing a potential upside of 19.86% from current levels.
Bottom Line on IonQ
Despite recent market volatility and unexpected comments from industry influencers, IonQ continues to lead the charge in quantum computing. Amid market turbulence, the company has made notable technological advancements and key acquisitions, such as Qubitekk, enhancing its position in the quantum networking space. IonQ’s continuous product innovation makes it a company worth following for investors interested in the revolutionary technology of quantum computing. However, investors should be prepared to be patient and willing to endure significant volatility along the way.
