IonQ Demonstrates Quantum Error Correction Technology

To address the processing delay problem, a chronic bottleneck in fault-tolerant quantum computers, IonQ demonstrated the industry's first end-to-end real-time quantum error correction decoder. This allows for error correction without slowing down even in millions of operations.

This technology resolves the critical bottleneck of processing delay in fault-tolerant quantum computers and has demonstrated the ability to correct errors without slowing down even in millions of operations.

IonQ showcased a decoding method that continuously processes complex workloads in the background using a single standard computer process.

Unlike existing methods that suffered processing bottlenecks due to fixed computer overhead during error decoding, IonQ's approach offers a practical path to operating quantum systems at maximum speed.

IonQ's decoding technology demonstrated its stability by performing over 31.5 million quantum operation tests.

It showed excellent performance with a decoding delay rate of only 0.02% even in standard operating noise environments.

This means that the decoding overhead does not add significant delay to the overall quantum operation speed.

Industry events such as the recent Quantum World Congress are expected to trigger a turnaround in investor sentiment for quantum-related stocks after a sluggish summer.

Quantum-related stocks, such as the Defiance Quantum ETF, which fell 8.9% over the past three months, may be driven higher by the US government's plan for $2 billion in subsidies and equity investments.

Government contracts, securing large customers, and achieving technological milestones are key factors influencing investment sentiment, making investors' criteria for the industry very strict.

IonQ aims for customer delivery in 2027, and Quantinuum also plans to release new products around the same time.

IonQ is taking orders for customer delivery in 2027, and Quantinuum plans to release its 4th generation quantum computer, SOE, in 2027.

IonQ accelerated the expansion of its Superion quantum platform by acquiring Skywater, which advanced its chip manufacturing roadmap and more than doubled its revenue.

Due to this strong execution and an upward revision of its 2024 guidance, IonQ is upgraded to a strong buy.

The 2024 revenue target is set at $450 million to $460 million, with the potential to exceed $1 billion next year. Additionally, the development speed has improved significantly by reducing the design cycle from 9 months to 2 months.

This accelerates 'Q-Day,' the point at which modern encryption systems are rendered powerless, intensifying the U.S.-China tech rivalry.

With the number of qubits needed for decryption significantly reduced from billions in 2012 to hundreds of thousands today, the national quantum computing competition between the United States and China is intensifying.

If the QC Ware acquisition is reflected, the 2024 revenue guidance is expected to rise to $450-460 million, and the annual median value has been revised upward to $285 million. This is the second upward revision this year.

With the acquisition of Skywater (QC Ware) reflected, 2024 guidance is expected to be $450-460 million, and in 2025, revenue is projected to exceed $1 billion, making it the first quantum computing unicorn company.

As of Q2 2024, IonQ boasts a robust financial position with $3 billion in cash and US Treasury investments and no bank debt.

After the Skywater acquisition, the remaining cash in Q3 is estimated to be approximately $1.9 billion to $2 billion, but the company still maintains high financial stability.

IonQ's P/S (price-to-sales ratio) is 51x, currently at a historical low, and is considered significantly undervalued within the industry.

While competitors like Rigetti or D-Wave are overvalued, IonQ is estimated to have a fair value of around $60 per share when applying a P/S of 75x based on independent revenue.

The biggest risk in the quantum computing industry lies in changes in market liquidity and investor sentiment. Rising Treasury yields and deteriorating market liquidity can increase selling pressure on unprofitable technology stocks.

From an operational perspective, proving scalability is a key challenge; even though IonQ has demonstrated excellent technical capabilities, it must show that it can scale them to achieve true quantum advantage. In particular, the successful launch of a 10,000-qubit system, expected after 2028, will critically impact enterprise value.

Even the lowest target price is $49, making the dominant opinion that approaching the stock with a buy perspective below the current $40 range is valid. The majority issue 'buy' ratings, with only one 'hold' opinion.