Finding a company that can make you a millionaire from a modest investment is rare. However, they are out there and sometimes right under investors’ noses. For example, $10,000 invested in Nvidia just a decade ago is now worth an astounding $2.71 million. This makes looking for millionaire-maker stocks so much fun, as those kinds of returns are out there, even if they are rare.
One area that investors may be looking in for the next millionaire-maker is quantum computing. Although Alphabet made headlines recently with its Willow quantum computing chip, other players in this space are pure-play investments. One of those is IonQ (IONQ 12.80%), but could it make you a millionaire by the time 2035 rolls around?
IonQ has some key contracts funding its research
First, let’s discuss regular computing versus quantum computing without getting too deep. Regular computers work on bits, which transmit information in 1s and 0s, making it a binary process. Quantum computers work with qubits, which are better described as the probability of information being a 1 or 0. This makes the amount of information between these two figures infinite, which can dramatically increase computing power.
The applications for quantum computing are enormous, and the amount of deals that IonQ signed last quarter depict that. It announced a partnership with AstraZeneca to accelerate drug discovery and development. It also signed a deal with engineering simulation company Ansys to bring quantum computing to that industry as well. But the cherry on top of its $63.5 million in Q3 bookings was a $54.5 million research contract with the U.S. Air Force Research Lab. All of these deals bring some revenue onto IonQ’s books, which is needed to continue funding its research and development.
Image source: IonQ.
While IonQ’s revenue rose 102% in Q3, all of this came from contracts, not wide-scale selling of quantum computers. All quantum computing companies are still in the development phase, as the usefulness of the technology hasn’t been achieved yet. So, it shouldn’t come as a surprise to investors that IonQ is burning through cash.
In Q3, IonQ generated $12.4 million in revenue but posted a net loss of $52.5 million. That’s deep unprofitability, and it raises the question of how long it can last without making a profit. At the end of Q3, IonQ had around $360 million in cash and short-term investments, so it had quite a bit of funding on the books.
Still, it will need to turn a profit to justify the business eventually. But is IonQ too much of a long shot for investors?
Investing in IonQ is like buying a lottery ticket
Nobody knows who will win the quantum computing race. While Alphabet had a breakthrough the other day, IonQ may have one tomorrow. There are also other heavyweights in this space, like IBM, Microsoft, and Nvidia. While it won’t be a winner-take-all race, IonQ is up against some companies that would consider IonQ’s $50 million loss in the quarter a rounding error.
However, IonQ has the advantage of having a key contract with the Air Force Research Lab and being a smaller company, which makes it more nimble.
Still, there’s no guarantee that IonQ will win this race. If it does, the stock likely does have a shot at turning investors into millionaires. However, that’s a long shot. So, if you want to invest in some of these quantum computing companies, I’d suggest this approach:
- You can make a basket of stocks by purchasing a few of the small quantum computing companies as well as some of the larger players.
- Keep position sizing low for long-shot stocks like IonQ.
If you do these things, you’ll potentially be exposed to the winner but won’t be harmed if IonQ loses the race. If I invest in IonQ, I’d probably make it no more than 0.5% of my overall portfolio because this business involves a huge risk. But, if it works out, that little 0.5% investment could quickly turn into a huge chunk of my portfolio.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Keithen Drury has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Microsoft, and Nvidia. The Motley Fool recommends Ansys, AstraZeneca Plc, and International Business Machines and 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.
