Thinking About Playing the Lottery? Investing in IonQ Could Be a Much Better Bet

Key Points

• More than half of Americans buy lottery tickets.

• But only about a fifth of American families hold individual stocks.

• Speculative stocks like IonQ have more upside potential than Powerball tickets.

• 10 stocks we like better than IonQ ›

Roughly 50% of Americans still buy a lottery ticket at least once a year, even though there's a minuscule one in 292 million chance of winning the Powerball jackpot. Many of those players likely buy lottery tickets as a habit instead of anticipating life-changing gains, but those losses still stack up. It costs $730 per year to buy a standard Powerball ticket for $2 every day, and even winning smaller prizes by matching fewer numbers probably won't offset those costs.

Meanwhile, only 21% of U.S. families directly hold individual stocks that aren't passively held in a mutual fund, index fund, or retirement account. Yet as the Wharton finance professor Jeremy Siegel once said, the stock market is the "greatest wealth creator of all time."

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The S&P 500 has delivered an average annual return of about 10% since its inception in 1957. If you had invested $730 in the S&P 500 every year over the past decade and reinvested your dividends, your investment of $7,300 would be worth about $12,800 today. If you had invested that $7,300 in a single lump sum, your investment would have grown to roughly $28,250. That's a solid inflation-beating return, but you might reap even bigger market-beating gains by taking a chance on some more speculative stocks.

One of those stocks is IonQ (NYSE: IONQ), an early mover in the nascent quantum computing market. Its stock has surged 475% over the past 12 months, but it still trades nearly 20% below its all-time high. Let's see why it makes more sense to take a chance on this risky stock than to buy another Powerball ticket.

What is quantum computing?

Traditional computers still store their data in binary bits of zeros and ones. Quantum computers can store those zeros and ones simultaneously in "qubits," which allow them to process data at a much faster rate than traditional computers. Yet quantum computers are still much bigger, pricier, and consume more power than traditional servers and mainframes. They also output a higher percentage of errors. That's why they're still mainly used for niche research projects instead of mainstream applications.

But according to Fortune Business Insights, the quantum computing market could expand at a compound annual growth rate (CAGR) of 34.8% from 2024 to 2032. That expansion should be driven by new technologies that make quantum chips smaller, cheaper, more power efficient, and more accurate.

Why does IonQ stand out in this market?

IonQ wants to achieve those goals with its "trapped ion" technology, which isolates individual ions (charged atoms) with electromagnetic fields in a vacuum chamber. It claims that proprietary process is more efficient and less error prone than other, more common methods, and that it can eventually shrink the width of a quantum processing unit (QPU) from a few feet to a few inches.

The company sells three quantum computers: its older Aria system, its flagship Forte system, and its data center-oriented Forte Enterprise system. It plans to launch its fourth system, the Tempo, by the end of this year. It also serves up its quantum computing power as a cloud-based service.

IonQ measures its quantum computing power in algorithmic qubits (AQ). Both versions of its Forte systems achieved 36 AQ at the end of 2024, and it expects Tempo to achieve at least 64 AQ this year by using barium ions instead of ytterbium ions to improve its stability.

From 2024 to 2027, analysts expect IonQ's revenue to surge from $43 million to $315 million as its systems are used across more industries. Its integration of Nvidia's parallel computing platform CUDA (Compute Unified Device Architecture) into its own quantum systems also gives it a firm foothold in the booming artificial intelligence (AI) market.

Why is IonQ a better bet than a lottery ticket?

With a market cap of $12.85 billion, IonQ isn't cheap at more than 40 times its projected sales for 2027. It will also remain unprofitable for the foreseeable future. That makes it a much riskier investment than a standard S&P 500 index fund or exchange-traded fund (ETF).

But if you invest just a few hundred dollars in IonQ every year over the next decade, you could reap much bigger rewards than your daily Powerball tickets. It won't be a smooth ride, but it could be one of the best long-term plays on the evolving quantum computing market.

Should you invest $1,000 in IonQ right now?

Before you buy stock in IonQ, consider this:

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.