Driving Superior Quantum Computing Investments: Alphabet versus IonQ
One sector in the artificial intelligence (AI) domain garnering significant interest lately is quantum computing. Despite numerous companies delving into quantum computing, only a select few have shown substantial progress.
Two companies leading this avant-garde are IonQ (IONQ 8.49%) and Alphabet (GOOG 1.31%, GOOGL 1.24%). By the close of Dec. 13, IonQ's shares have soared an astounding 173% this year, outperforming Alphabet's 36% return quite handily.
Could IonQ potentially surpass one of tech's heavyweights? Let's scrutinize how both companies are advancing quantum computing and subsequently decide which stock may be the better buy.
So, what's quantum computing?
In essence, quantum computing harnesses quantum mechanics to bring about enhanced speed and efficiency in solving complex issues. Unlike traditional computers that code data in binary bits (0s or 1s), quantum computers utilize qubits (quantum bits). Qubits enable data values to exist in multiple states simultaneously -- a concept known as superposition.
In simpler terms, these quantum computers should theoretically be capable of processing data and solving problems that could take years or even decades using current infrastructure.
Examining IonQ
IonQ specializes in trapped ion technology. In essence, IonQ employs lasers to manipulate ions serving as the quantum bits. According to IonQ, this technique can yield lower error rates while processing data, consequently speeding up process times for extremely complex applications.
Currently, IonQ leverages partnerships with cloud computing providers such as Microsoft, Amazon, and Google. Software developers using these cloud platforms can gain access to IonQ's quantum computing services, thereby saving time on researching and building these hardware products.
At first glance, IonQ may appear poised for substantial disruption. However, a glance at the financial records suggests a different story.
Although IonQ's revenue trendline is ascending, the company has only generated $37.5 million in sales over the past year. This implies that quantum computing is still an evolving field with limited demand for the technology as of now. Moreover, IonQ is significantly in the red, and its net losses are actually increasing despite mounting revenue.
Examining Alphabet
Alphabet's subsidiary Google is primarily recognized for its dominance in the internet search department. Nevertheless, Google has secret projects in the shadows, including quantum computing, in which it has made significant strides over the past few years.
Back in 2019, Google introduced its quantum processor, named Sycamore. Sycamore resolved a problem within 200 seconds that Google estimated would necessitate 10,000 years using a traditional supercomputer. This achievement served as preliminary proof of quantum supremacy -- or the assertion that quantum computing showcases advantages over present computer standards.
Recently, Google announced another development from its quantum plan, a chip they've nicknamed Willow. According to the press release, Willow's architecture allows for improved control of qubits -- thereby reducing error rates as the quantity of qubits escalates.
To the average person, Willow's power is such that it can address a benchmarking problem within less than five minutes that would require today's best supercomputers an estimated 10 sextillion years to conclude.
The verdict
Although IonQ and Alphabet have produced impressive results in the quantum computing sphere, it's apparent that both companies still have a long way to go. Quantum computing is far from a commercially accessible technology and may not become mainstream for at least another decade (at the earliest). It's highly likely that IonQ, Alphabet, and other competitors will continue to pour substantial investments into future quantum ventures over the forthcoming years.
Considering this, Alphabet benefits from having ample fiscal resources to fund growth initiatives without endangering its primary sources of revenue from advertising, search, and cloud computing. By contrast, IonQ's financial sources are limited, and its quantum computing methodology could still be seen as speculative at this point.
So, given the circumstances, Alphabet seems to be the obvious choice despite its relatively lackluster performance in relation to quantum computing milestones.
In the realm of potential investments, some investors might consider diversifying their finance portfolio by exploring opportunities in quantum computing companies. Given IonQ's impressive 173% growth this year and Alphabet's significant advancements in quantum computing, both companies present interesting investing prospects.
In light of their financial reports, Alphabet, with its substantial resources and stable income streams from advertising, search, and cloud computing, could be a safer bet for investors seeking financial stability. On the other hand, IonQ, despite its game-changing technology, still faces challenges in terms of revenue and profitability in the rapidly evolving quantum computing market.
