IonQ (IONQ) stock has slumped along with other names in the quantum computing sector following comments made by Nvidia (NVDA) CEO Jensen Huang in early January. However, despite the free-falling share price and cheapening valuation, I’m bearish. This stock rose on the expectation that a quantum revolution was potentially just around the corner, but the reality is that investors will need to be very patient. The stock still looks overvalued, and it’s operating in a crowded space, so not every company will make it. As such, I don’t think it’s time to buy IonQ stock.
IonQ is a pioneering quantum computing company that utilizes trapped-ion technology to develop quantum computers. Unlike traditional approaches, IonQ’s method employs lasers to manipulate individual atoms as qubits, potentially enabling longer and more sophisticated calculations with fewer errors. It’s all incredibly interesting, and judging by the company’s robust set of announcements towards the end of 2024, this approach has positioned IonQ as a leader in the quantum computing industry — at least among small caps.
However, recent comments by Nvidia CEO Jensen Huang have sent quantum computing stocks, including IonQ, into a tailspin. During Nvidia’s CES 2025 event, Huang suggested that practical quantum computers might be 15 to 30 years away from realization. It’s a disappointing timeline, but likely the reality check that the stock market needed.
Following Huang’s remarks, IonQ’s stock plummeted by around 40%, alongside significant drops in other quantum computing companies. The market reaction highlights the speculative nature of the quantum computing sector and the substantial gap between current capabilities and commercial viability.
One of the reasons why I’m bearish is because IonQ operates in an increasingly crowded quantum computing segment, where many companies are likely to struggle to survive in the long term. The quantum computing landscape is teeming with both established tech giants and innovative startups, all vying for dominance in this nascent field. With major players like IBM (IBM), Google (GOOGL), Amazon (AMZN), Microsoft (MSFT), and Intel (INTC) investing heavily in quantum technology, alongside numerous smaller companies like Rigetti (RGTI) and D-Wave Quantum (QBTS), the competition is fierce.
The Gartner hype cycle suggests that while there will be winners in quantum computing, there will also be many losers — currently, we appear to be heading towards Gartner’s trough of disillusionment, which is a period after the peak of inflated expectations. Some firms will inevitably run out of funding as they pursue approaches that prove difficult to scale or simply execute their strategies poorly. This is particularly concerning for a company like IonQ, which, despite its innovative trapped-ion approach, faces significant challenges in commercialization and profitability.
Furthermore, before the late 2024 bull run that preceded the free fall, pure-play quantum computing stocks were facing several challenges, including talent and funding. While IonQ’s cash reserves provide a decent runway, the company continues to lose money. However, a late 2024 deal worth $54.5 million with the U.S. Air Force Research Lab to develop quantum networking hardware provided a boost to the company’s credentials.
As noted, IonQ is expected to remain unprofitable for a while, which reinforces my bearishness as it’s hard to construct a valuation-based thesis when profitability is so many years away. Despite this, its revenue projections are promising.
The company’s revenue is forecast to grow significantly, with estimates showing a consistent upward trend from $41.6 million in 2024 to $314.6 million by 2027. This represents a remarkable compound annual growth rate (CAGR) of approximately 96% over the four-year period.
Due to this impressive revenue growth, IonQ’s forward price-to-sales ratios are expected to decrease from 167.9x in 2024 to 22.2x in 2027, indicating that the stock’s valuation may become more attractive over time. However, this is still very expensive compared to other parts of the market, and investors should note that the company’s continued losses may pose risks, even as its top line expands rapidly.
On TipRanks, IONQ comes in as a Moderate Buy based on four Buys, two Holds, and zero Sells assigned by analysts in the past three months. The average IONQ stock price target is $37, implying about 34% upside potential.
See more IONQ analyst ratings
I’m bearish on IonQ despite its innovative technology and promising revenue growth projections. The lengthy timeline for quantum computing commercialization, coupled with the stock’s current valuation, makes it a speculative play.
IonQ operates in an intensely competitive sector where many players are unlikely to survive, and its ongoing losses amplify the risks. While analyst ratings highlight some optimism and the company’s partnerships are definitely noteworthy, the broader market challenges and uncertain path to profitability cannot be ignored.
Until IonQ demonstrates clearer progress toward scalability and commercial viability, it remains a high-risk investment suited only for incredibly patient, long-term investors. As a result, I’m going to look beyond analysts’ targets on this occasion.
