IonQ Is Still ‘in the Early Innings.’ Why It’s Positioned to Become a Quantum Leader.

IonQ said it aims to scale up from 256 physical qubits in 2026 to 2 million physical qubits by the end of the decade. (COURTESY IONQ)

Quantum-computing companies and investors alike may be tempering their expectations, but one analyst believes IonQ is closer to commercializing its technology than the broader market anticipates.

Before the market opened Monday, IonQ announced the pricing of a $1 billion equity offering at $55.49 a share, representing a 25% premium to Thursday’s closing price. The $978.5 million of net proceeds from the offering will bring IonQ’s pro-forma cash to roughly $1.68 billion and drive the company’s growth to commercialization.

Also on Monday, Benchmark analyst David Williams reiterated a Buy rating on the shares and boosted his price target to $55 from $50. The adjustment came after Benchmark hosted a fireside chat with members of management including IonQ CEO Niccolo de Masi.

A claim by de Masi that IonQ would become “the Nvidia of quantum computing” helped send the stock through the roof on May 22. It notched record intraday and closing gains of 46% and 37%, respectively.

Williams is just as enthusiastic about IonQ’s prospects to make a name for itself in an increasingly crowded market. He says IonQ is “positioning itself as a leader in both quantum computing and the increasingly critical field of quantum networking.”

Quantum networking connects multiple quantum processors, effectively pooling computing power. The approach is meant to overcome the limitations of single machines, such as performance issues caused by environmental disturbances, by distributing workloads across a network.

IonQ views computing and networking as “symbiotic,” Williams said, with the company “aiming to provide end-to-end quantum solutions that address a wider range of customer needs.”

In addition to the company’s “dual approach” to computing and networking, revenue is diversified across hardware sales, quantum computing as a service, and applications.

While application development currently represents a smaller chunk of total revenue, “it is considered the most important long-term value driver,” Williams said. “The strategy focuses on landing customers with either computing or networking solutions and then expanding the relationship to build a sticky ecosystem.”

De Masi himself has argued that networking is a more viable approach to building bigger quantum computers than simply adding qubits, which serve as basic units of information in a system. “If you just picked a better path, it doesn’t take a lot of qubits to do useful work. We scale through quantum networking,” the CEO told Barron’s.

The company’s end goal is to build a so-called quantum internet, with its computers acting as the primary nodes. Williams believes IonQ has “the most commercial business model and differentiated go-to-market strategy among peers,” saying that will serve the company as the quantum-computing industry matures.

Developing larger quantum machines has proven to be a challenge industry-wide. As more qubits are added to a system, the likelihood of errors generally increases. International Business Machines is tackling the problem head-on by developing a built-in error correction system; the first fault-tolerant quantum supercomputer is expected by 2029.

IonQ aims to gradually scale up from 256 physical qubits in 2026 to 2 million physical qubits and 80,000 logical qubits by the end of the decade. Williams noted that management is confident in its technical roadmap, “which it believes is in sharp contrast to competitors.”

De Masi has expressed his own conviction that the company is well-positioned. “There’s lots of nonsense that flies around the universe of startups that say that in 2030 or 2035, they’re going to wipe the floor with us,” the chief executive told Barron’s, alluding to IonQ’s pure-play competitors. “But I always remind them that we’re not going to sit on our hands for the next five years.”

The company already has a handful of scientific milestones under its belt. These include breakthroughs in protein folding and particle physics, the latter reached in collaboration with the U.S. Department of Defense.

Last month, the company said it had achieved a significant speedup in a drug-discovery problem as part of a joint effort with AstraZeneca, Amazon Web Services, and Nvidia. Results like these serve as “validation of quantum’s ability to provide meaningful benefits ahead of fault tolerant systems,” Williams said.

In a separate note Monday, Cantor Fitzgerald analyst Troy Jensen reiterated an Overweight rating and $45 price target on the shares.

Jensen acknowledged that IonQ is “in the very early innings of commercializing its technology.” Nevertheless, he believes the company is positioned to capture 20% of the quantum hardware, services, and software market by 2035.

IonQ is only the latest pure play to sell stock. D-Wave Quantum, Quantum Computing, and Rigetti Computing have done the same in recent weeks. The wave of capital raises is a reminder that the peers have a long way to go before generating profit.

However, the size of IonQ’s latest offering—the second in the company’s history—is a sign of “renewed investor interest in the quantum computing industry and the ability of companies to raise capital to fund growth plans,” Jensen said.

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com