Down 30%, Should You Buy the Dip on IonQ?

Quantum computing stocks captivated investors like few other sectors in recent months. Ever since Alphabet's Google announced its state-of-the-art quantum chip, Willow, in December, quantum computing stocks have soared. Many investors see them as the next major technology on the horizon, following in the footsteps of artificial intelligence (AI).

One of the biggest players in AI is IonQ (NYSE: IONQ), a developer and seller of quantum computers. The company sells hardware, software, and services, making its quantum computers available through providers like Amazon Web Services, Microsoft Azure, and Google Cloud, a business model known as quantum-computing-as-a-service (QCaaS).

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IonQ differentiates itself from other publicly traded quantum computing stocks like Rigetti Computing, D-Wave Quantum, and Quantum Computing because of its trapped-ion technology, which uses atoms suspended in a vacuum and manipulated with lasers.

Right now is also an excellent time to consider buying IonQ stock, as it's down 30% from its peak late last year, and it's pulled back by nearly as much after a surge in late May, following an interview in Barron's with CEO Niccolo de Masi, who said the company aimed to be the "Nvidia of quantum computing."

With IonQ stock having cooled off a bit in June, let's take a closer look at what the stock has to offer.

Image source: Getty Images.

Can IonQ keep climbing?

Despite a market cap over $10 billion, IonQ is still essentially a development-stage company, as it brought in just $7.6 million in revenue in the first quarter. However, that was down slightly from the year before, showing the company is not delivering the kind of growth you might expect from a high-priced stock like IonQ.

IonQ is also deeply unprofitable, with the company posting a generally accepted accounting principles (GAAP) operating loss of $75.7 million in the period, or 10 times what it brought in revenue.

It does expect revenue growth to accelerate over the remainder of the year, forecasting $75 million to $95 million in revenue for the full year. That forecast, which includes some small acquisitions, targets revenue roughly doubling from $43.1 million last year.

There are other signs the company is making progress. It signed a $22 million deal with EPB of Chattanooga, an energy and telecom company, and it's waiting to close on its acquisition of Lightsynq Technologies, a maker of quantum interconnects to bridge the gap to large-scale quantum computers.

IonQ also took part in Nvidia's first-ever Quantum Day, where it demonstrated quantum-accelerated computation and commercially relevant applications, further evidence that quantum computing could is progressing toward mainstream.

Additionally, Nvidia CEO Jensen Huang said in June that the technology is at an inflection point, comments that came just months after he said that "very useful" quantum computers could be decades away.

Is IonQ a buy?

There's no question that there's a ton of uncertainty around quantum computing stocks right now. Valuations have been inflated by the attention placed on the sector following Google's announcement about Willow last December. Based on IonQ's guidance, the company still trades at a price-to-sales ratio of more than 100 using its 2025 forecast.

However, there is real momentum in the industry, and analysts expect IonQ's revenue to double both this year and next.

Given its leadership in quantum computing, business momentum, and expected revenue growth, opening a small position in the stock seems reasonable for risk-tolerant investors. Keep in mind that the risk with IonQ remains high at the current valuation, and the stock could fall a long way if its performance comes up short in the coming quarters.

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

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Jeremy Bowman has positions in Amazon and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.