IonQ, Inc. (NYSE:IONQ) works on the cutting edge of technology, focusing on quantum computing. As the company’s website says, “Quantum computing has the potential to change the world, and IonQ is leading the way.” That’s important and fascinating work — but it doesn’t make IONQ stock a buy just yet.
Quantum computing gets its name from the quantum theory of physics, which explains the action of matter and energy on an atomic level. Quantum computers work with far more computational power than normal computers and are vital as technology advances.
The company writes that it is “developing trapped-ion quantum computers, bringing this powerful technology out of the lab and into commercial, industrial, and academic applications. Ionized atoms are the heart of our quantum systems, and as a result, we believe our computers can perform longer, more sophisticated calculations with fewer errors than any quantum computer yet built.”
Quantum Computing Is Growing
IONQ stock, which went public in late 2021, believes that the quantum computer market will experience growth and its business model is aligned to participate in this growth. And it looks like they’re right, at least about the first part. Fortune Business Insights reported last month that the quantum computing space is expected to grow from $486 million in 2021 to $3.181 billion by 2028 — a compound growth rate of over 30%.
The company has created six generations of quantum computers since 2015. IONQ expects to demonstrate modular quantum computers that are small enough to be networked together in datacenters in the coming years.
On April 19, BusinessWire.com reported that IONQ and Hyundai Motor Company (OTCMKTS:HYMTF) announced their new project that is “designed to apply quantum machine learning to image classification and 3D object detection for future mobilities.” In other words, they’re using this partnership to try to move closer to true autonomous vehicles.
IonQ’s specialties should be a boon to this kind of work, as quantum computers can process data faster and more accurately than classical systems.
Still, investors should be cautious in this market before deciding that IonQ is a stock to buy. The company has ambitious plans, and thinks those plans are obtainable. But it is not profitable yet, and in this volatile market, investors should be cautious — especially when considering a company that does not have earnings bolstering its market price.
So investors interested in IONQ stock should watch developments and the stock price closely, because things could change quickly. It needs its agreement to pan out and bring in more revenue. And earnings do not seem likely to improve soon. Analyst average earnings expectations, according to MarketWatch.com, are -31 cents this year, -47 cents in 2023 and -70 cents in 2024.
While that may indicate a company reinvesting in its own growth, the outlook is too uncertain yet to make a confident purchase.
On the date of publication, Max Isaacman did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.