IonQ
(IONQ, $11.77): “Quantum-Mania”
By: Nasser
Hyat-Khan, AIM Student at Marquette University
Disclosure:
The AIM International Equity Fund currently holds this position.
This article was written by myself, and it expresses my own opinions. I am not
receiving compensation for it, and I have no business relationship with any
company whose stock is mentioned in this article.
Summary
- IonQ,
Inc. (NYSE: IONQ) develops and manufactures quantum
computers. The firm specializes in quantum computing and quantum
information processing, bringing this new technology into commercial, industrial,
and academic applications.
- IonQ’s
quantum hardware is now available on all major clouds (AWS, Azure, Google
Cloud) and all major quantum software development kits (SDK’s). They have
partnered with top academic institutions such as Cambridge, MIT, Oxford,
Princeton, University of Chicago and more.
- The
revolutionary company has recently reported that they will publish FY21
financial results on March 28, 2022.
- They
have recently developed a new barium-based quantum computer which,
per-qubit, has reduced errors over 12x.
- IONQ
may be off its 52-week highs, but with the latest innovations, we could
see the stock push passed those figures.
Key
points: IonQ continues to outperform its
competitors in technological developments. On March 3rd, they
reported that its new Barium systems demonstrated industry leading qubit
readout performance. According to the article, per-qubit, IonQ has reduced
errors from
50 per 10,000 computations to 4 errors per 10,000 computations. This development
has brought IonQ from a 99.5% state detection fidelity, up to first place in
the industry with 99.96%.
One of
the many perks in this industry is that there are a lot of complicated acronyms
with words that make little sense to most readers, but fear not I am here to
help. In short, a regular computer operates step-by-step on “bits” (0’s and
1’s), a quantum computer uses “qubits” that can operate both 0’s and 1’s and
everything in between simultaneously. Something a regular computer would take
centuries to process; a quantum computer could accomplish in several minutes.
IonQ is
famous for its Quantum Volume, which is the overall metric that measures the
capabilities of a quantum computer, more volume means more circuits means more
computing power. With the latest information IonQ boasts a 4.2 million QV. Its
closest competitor Google is at 256 QV.
This is
an astounding number, but one of the drawbacks with new technologies is that
there are issues. One of problems in the industry are state preparation and
measurement (SPAM) errors. SPAM errors are key metrics for producing accurate
and reliable quantum computers, which were the computation errors mentioned
previously that have since been reduced significantly.
The
accuracy of computing results is key for the further adoption of quantum
computers in all industries from finance to agriculture. However, there are
three main types of errors that a QC’s experience: imperfect state preparation
at the beginning of a program, imperfect logic gates while running an
algorithm, and imperfect measurements. Essentially for the computer to do its
job these errors have to be terminated quicker than Lewis Hamilton can go
around an F1 track.
Fortunately, IONQ is doing that
better than anyone else with a technical lead over all commercial quantum
computing providers. Its ion-trapped computers have proven to yield more qubits
than any other architecture, and it seems as though barium computers will
surpass its predecessor.
What
has the stock done lately?
IonQ has fallen off its weekly
high of $16.57 by almost 30%. This may sound like a lot but given current
market conditions and how the rest of the tech industry has been treated over
the last few months this is not surprising. With earnings coming up, a better
picture should be shown of how the company is operating.
Past
Year Performance: Since its public
release, IonQ has seen lots of volatility. At one point the stock was up over
400% and has since come down from its $35.90 high by about 60%. The AIM
programs conservative price target of $18.34 was surpassed and shares remained
above for months, but global factors such as COVID and Russia have been
affecting the stock price ever since.
My
Takeaway
IonQ is a pure play quantum
computing company that has consistently developed outperforming computers that
are available to commercial, industry, and academic users through SaaS. The
stock price decline over the last several months indicates an interesting
long-term buy opportunity. The innovation at this company is unprecedented, and
the high of $35.90 demonstrated that not only could our long-term valuation be
beaten, but Wall Streets as well. The current share price of $11.77 depicts a
serious discount opportunity for investors with the potential for massive
upside in the future. Quantum computing is still in its early stages, but at
the rate that IonQ is developing its craft, we may see those highs become the
lows.
