Can IonQ Be the Leader in Quantum Computing as a Service?

Key Points

• IonQ sells remote access to its quantum computers, Quantum Computing as a Service (QCaaS).
• Investors include Google Ventures, Lockheed Martin, Silver Lake and Amazon.com.
• IONQ shares have a 16.5% short interest.

Quantum computing has become a reality as more applications materialize. The viral growth of artificial intelligence (AI) applications driven by the AI battle between Alphabet Inc. NASDAQ: GOOGL, Google Bard AI and Microsoft Co. NASDAQ: MSFT and Open.ai.

ChatGPT has investors searching for the next significant innovation, which points to quantum computing. Quantum computing systems developer IonQ stock, IonQ Inc. (NASDAQ: IONQ), has recently surged to 52-week highs at $9.45 on its Q1 2023 earnings report. 

IonQ provides accessibility to quantum computing by selling remote access to its quantum computers, quantum computing as a service (QCaaS).

What is Quantum Computing?

Quantum computers can solve problems with many variables, steps and outcomes faster than traditional computers. Quantum computing enables multiple simultaneous processes by lateralizing quantum bits (qubits) versus the current binary form of ones and zeros. The result is the ability to perform fast computations, which would take a supercomputer 10,000 years to calculate.

Trapped Ion Technology

IonQ utilizes trapped ion technology, which are atoms cooled to near-zero kelvin and trapped in a place with electric fields. Trapped ion technology uses identical qubits, which can have higher accuracy and reliability with longer coherence times. 

Quantum computing is most effective for solving problems with an enormous number of variables and similar optimization needs. For example, drug discovery takes years to decades, testing massive numbers of compounds and proteins in infinite combinations. Quantum computing could accelerate the time from the initial disease targeting to treatment development from years to minutes or even seconds. It can accelerate machine learning and AI dramatically, scanning exponentially more neural networks simultaneously to deliver better results rapidly, bringing strong AI closer to reality.   

Beat and Raise

On May 11, 2023, IonQ released its first-quarter 2023 results for March 2023. Revenues grew 131% YoY to $4.3 million versus $3.8 million analyst estimates. The company reported an earnings-per-share (EPS) loss of 14 cents, excluding non-recurring items, versus consensus analyst estimates of nine cents, missing estimates by five cents.

Algorithmic Qubit

IonQ CEO Peter Chapman explained that IonQ focuses on fidelity measured by an application-oriented benchmark called algorithmic qubits (AQ). The company achieved its goal of 25 AQ last year and reached its 29 AQ seven months early in 2023. 

He commented, "Our next major technical milestone is achieving 35 AQ, which is particularly significant. At 35 AQ, simulating the operations of quantum algorithms using classical hardware can become exceedingly challenging and costly."

Guidance Raise

IonQ raised its full-year 2023 revenues from $18.8 million to $19.2 million versus $18.6 million analyst estimates. It reiterated its previous bookings estimate range of $38 million to $42 million. It's worth noting that IonQ is backed by Amazon.com Inc. NASDAQ: AMZN, Google Ventures, Lockheed Martin Co. NYSE: LHT, the U.S. Department of Energy and the U.S. Department of Defense. IonQ's QCaaS is accessible through Amazon AWS and Microsoft Azure platforms. IonQ went public via a reverse merger with a special purpose acquisition company (SPAC) dMY Technology Group III on September 20, 2021, and has been the target of short seller Scorpion Capital.

Look for IonQ Inc. analyst ratings and price targets on MarketBeat.

Potential Weekly Cup and Handle   

The weekly candlestick chart on IONQ completed its cup and awaiting the handle portion of the pattern. The cup lip line formed at $8.61 in August 2022 as shares fell to a low of $3.04 in December 2022. 

IONQ formed a rounding bottom as it triggered a weekly market structure low (MSL) breakout to retest the cup lip line on a spike to its 52-week high at $9.49 in May 2023. The weekly stochastic oscillation down has stalled near the 60-band, awaiting either a cross-over backup or a mini inverse pup back down if shares fall under the MSL trigger. Pullback support levels are $7.12 weekly MSL trigger, $6.37, $5.29 and $4.74.