Down 45%, Should You Buy the Dip on IonQ?

Leo Sun, The Motley Fool

Mon, May 5, 2025, 7:45 AM 5 min read

• The quantum computing specialist has grown rapidly since its public debut.

• Its computing power is increasing as it rolls out more powerful systems.

• But a bit too much of its future growth is baked into its current valuation.

IonQ (NYSE: IONQ), a provider of quantum computing systems and cloud-based services, went public by merging with a special purpose acquisition company (SPAC) on Oct. 1, 2021. The combined company's stock started trading at $10.60 per share, then endured some wild swings before closing at a record high of $51.07 on Jan. 6, 2025.

At the time, investors were impressed by IonQ's early mover's advantage in the quantum computing market and its rapid growth. President Donald Trump's victory in last November's U.S. election also sparked a buying frenzy in pricier growth stocks.

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Yet, IonQ's stock has plunged about 45% since then. The bulls retreated as the Trump Administration's "Liberation Day" tariffs rattled the markets and stoked fears of a recession. It also became increasingly difficult to justify its sky-high valuations. So should investors consider IonQ's pullback to be a buying opportunity, or a grim warning of darker days ahead?

Traditional computers, even those running the fastest CPUs, store their data in binary bits of zeros and ones. Quantum computers store zeros and ones simultaneously in "qubits," so they can process larger amounts of data at a much faster rate.

However, quantum computers are also larger, consume more power, and are much pricier than traditional servers and mainframes. They also make a higher percentage of mistakes. Due to those limitations, they're still mainly used by universities and government agencies for niche research projects, instead of for mainstream computing tasks.

IonQ sells three quantum computers: Its older Aria system, its flagship Forte system, and its data center-oriented Forte Enterprise system. It plans to roll out its fourth system, the Tempo, later this year.

All its systems use a "trapped ion" technology that isolates individual ions (charged atoms) with electromagnetic fields in a vacuum chamber. It claims that this process is more accurate and power-efficient than other competing methods like superconducting qubits and photonic qubits. IonQ also serves up its quantum computing power as a cloud-based service for customers that want to develop quantum applications without installing on-premise systems.