- IONQ Inc †IONQ) is at the forefront of quantum computing, a revolutionary technology with huge implications for everything from AI to cryptocurrency.
- IonQ predicts sales will be five times that of 2021 by 2022 and has signed several high-profile deals this year.
- Despite a post-profit rally, IONQ stock is down 22% in 2022 and 56% below its November 2021 high, providing a buying opportunity.
Quantum computing pioneer IONQ Inc (NEW:IONQ) released its full-year and fourth-quarter 2021 results last week.
The startup started trading publicly 13 months ago following a SPAC merger. IonQ delivered an impressive year, culminating in a Q4 that marked the market. Annual revenue of $2.1 million exceeded the company’s own targets by 31%. For the fourth quarter, revenue of $1.6 million was 50% above expectations.
Contract bookings were another strong sign that IonQ is on the right track. Last September, the company revised its original contract booking estimate for 2021, tripling the forecast to $15 million. The company also ultimately beat the revised forecast, ending 2021 with $16.7 million in contracts.
These are early days, so the company still reported a net loss of $106.2 million for the year, with a loss of 39 cents per share for the quarter. However, IonQ still has $603 million in cash, cash equivalents and investments.
The market response to IonQ’s revenues was positive. IONQ stocks are currently in a three-day rally where it is up nearly 7%.
Quantum Computing Will Be Huge
Before we return specifically to IonQ, it’s a good idea to take a closer look at quantum computing, as it can be confusing.
Traditional computers use transistors to perform calculations with bits, which can represent a one or a zero. Quantum computers use properties of quantum physics to perform calculations. Instead of bits, they use qubits, which can represent both one and zero at the same time. Quantum computers are incredibly powerful and well suited for data analysis and simulations. To remain stable and reduce errors, quantum computers must be operated at extremely low temperatures.
Operational limitations and relative strengths mean that quantum computers will not replace traditional computers for all tasks. No one is going to use a quantum computer to run Microsoft (NASDAQ:MSFT) Office for example. But quantum computing has huge potential in areas like artificial intelligence. It threatens to destroy the current encryption methodology, which has huge implications for cybersecurity and cryptocurrency. There are also applications in finance, engineering and other fields.
Jim Pfaendtner, a chemical engineering professor at the University of Washington, says Moore’s Law (that computers will double in computing power every two years) will be thrown out the window. In a 2021 interview, he explained how quantum computing will change everything: “You will have a radical change in the type of a certain class of calculations – the scale is vastly higher … So the number, the magnitude of the calculations you you can start to think of doing will really change overnight as this technology becomes a reality.”
As reported in the Harvard Business Reviewthere are projections that quantum computing could be a $1 trillion industry in the coming decades.
IonQ is a market leader with enormous potential
IonQ stocks are cheap given the potential value of quantum computing. The key to IonQ is that the potential is not theoretical. It is the world’s first pure play quantum computing company. IonQ’s Aria quantum computer system is in its second generation.
The company’s latest results show that it is making progress in commercializing this technology. Part of leaving the revenue targets in the dust is deals made with some very high profile clients. This includes a partnership with car manufacturer Hyundai (OTCMKTS:HYMTF) to advance next-gen EV batteries using quantum computing, and an agreement with Microsoft to add IonQ Aria to Microsoft’s proprietary Azure Quantum platform.
Should You Buy IONQ Shares?
Quantum computing is still in its infancy, but right now IonQ has the world’s most powerful quantum computer in the Aria. And it’s making great strides in commercializing the technology. The company is still in the money-losing phase as it scales up and continues to develop its Aria system. However, IonQ has plenty of cash on hand and is signing up for large clients.
IONQ shares earn a “B” rating in Portfolio reviewer. Still not available for 2022, it offers an opportunity to be an early investor in what appears to be a key long-term growth industry.
At the date of publication, Louis Navellier was long in MSFT. Louis Navellier had (directly or indirectly) other positions in the securities mentioned in this article. InvestorPlace Research Employee primarily responsible for this article had no (direct or indirect) positions in the securities referred to in this article.