Better Quantum Computing Stock: IonQ vs. Alphabet
At the forefront of this revolution are IonQ (NYSE: IONQ) and Alphabet (NASDAQ: GOOG)(NASDAQ: GOOGL), two companies pursuing distinct technological approaches to quantum computing. As this cutting-edge technology reshapes fields ranging from drug discovery to financial modeling, understanding their unique strategies and market positioning is essential for investors looking to capitalize on its potential.
Below, I'll explore each company's quantum platform to assess which stock offers the best exposure to this transformative innovation.
The case for IonQ
IonQ's competitive position in quantum computing rests on three key advantages. First, the company's trapped-ion technology is experiencing strong commercial traction, particularly in government and defense.
The company's business momentum is reflected in two recent U.S. Air Force Research Lab contracts -- a $54.5 million quantum computing agreement and a new $21.1 million quantum networking project via Qubitekk. These contracts, coupled with a new strategic partnership with General Dynamics, demonstrate growing confidence in IonQ's quantum solutions.
The company's cloud-based quantum computing services represent another key advantage. IonQ makes its quantum computers accessible through major platforms including Amazon, Microsoft, and Google, creating multiple revenue streams while expanding market reach. This quantum-computing-as-a-service (QCaaS) model allows customers to experiment with quantum applications without significant upfront investment.
However, IonQ remains deeply unprofitable as it prioritizes technological advancement over near-term earnings. Last November, the company reported a net loss of $129.6 million in the first nine months of 2024, with an accumulated deficit of $481.7 million. While concerning, these losses reflect heavy investments in achieving higher qubit counts and fidelity-critical milestones for reaching broad quantum advantage.
The case for Alphabet
Alphabet's quantum computing ambitions demonstrate the power of deep technical expertise and resources. The company's latest Willow quantum processor shows remarkable progress, achieving error correction that scales with more qubits -- a crucial milestone known in the industry as "below threshold." This breakthrough suggests Alphabet is making significant strides toward practical quantum computing.
The technical achievements are striking. Willow completed computations in under five minutes that would take today's fastest supercomputers billions of years to solve. While this benchmark doesn't yet have commercial applications, it validates Alphabet's approach to quantum architecture and error correction. Moreover, Alphabet's state-of-the-art fabrication facility in Santa Barbara gives it end-to-end control over the complex manufacturing process.
However, Alphabet's quantum computing efforts represent just one initiative within its vast technology portfolio. The company's recent earnings show strong artificial intelligence (AI) monetization and cloud growth, driving a rather healthy operating margin of 32% in the most recent quarter. While quantum computing could enhance these businesses over the long term, particularly in AI applications, it remains a research-focused investment, rather than a near-term revenue driver.
Which stock is the better quantum computing play?
For investors seeking pure quantum computing exposure, IonQ presents a clearer opportunity, despite its current unprofitability. The company's growing government contracts and strategic partnerships demonstrate commercial validation of its trapped-ion technology, while its cloud-based service model creates multiple paths to revenue growth as the quantum computing market develops.
Alphabet offers a more balanced investment proposition. While its quantum computing breakthroughs are impressive, particularly in error correction, they represent just one component of a diverse technology portfolio.
The tech stock gives investors quantum computing exposure alongside established revenue streams from advertising, cloud services, and artificial intelligence development. However, for investors specifically seeking quantum computing exposure, pure-play alternatives may offer more focused opportunities.
Should you invest $1,000 in IonQ right now?
Before you buy stock in IonQ, consider this:
The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and IonQ wasn't one of them. The 10 stocks that made the cut could produce monster returns in the coming years.
Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you'd have $813,868!*
Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. George Budwell has positions in IonQ and Microsoft. The Motley Fool has positions in and recommends Alphabet, Amazon, and Microsoft. 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.
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