IonQ Stock Trades Higher Than Industry at 92.64X P/S: Still a Buy?

Shares of IonQ, Inc. IONQ have seen a strong rally in recent months, supported by strategic wins, expanded government engagements, and progress in quantum networking. But the stock’s valuation, trading at 92.64x forward 12-month price-to-sales (P/S), far above the Zacks Computer - Integrated Systems industry average of 3.53, raises concerns for many investors.  

It’s also well beyond IonQ’s two-year range low of 20.55. However, this valuation isn’t about current earnings, it's a bet on IonQ’s ability to dominate the next era of computing and communications through its quantum ecosystem.

IONQ’s Valuation Vs Industry

With revenue of only $7.57 million in first-quarter 2025, the valuation may seem disconnected from fundamentals. But IonQ’s market position and acquisitions suggest a broader story unfolding, one that could ultimately justify the premium.

IONQ’s Strong Stock Performance Reflects Investor Confidence

IonQ has delivered an impressive 62.3% gain in the past three months, handily outperforming the Zacks Computer - Integrated Systems industry’s 12.2% rise and the Zacks Computer and Technology sector’s 10.2% increase. The company has also beaten the S&P 500's 5.3% gain during the same period. This momentum suggests growing investor confidence in the company's commercial viability and technology roadmap.

At current prices, the stock trades 30.5% below its 52-week high of $54.74, which offers a potential upside for new buyers. However, it still sits 511.6% above its 52-week low of $6.22, reinforcing how quickly the market has priced in IonQ’s future potential.

IONQ Share Price Performance

Let's examine whether IONQ remains a compelling buy at current levels.

IonQ’s Product Wins, Global Expansion, and Acquisitions

A major boost came from the $22 million sale of its Forte Enterprise system to EPB in Tennessee, the first commercial deployment combining a quantum computer and network. This deployment not only provided material revenue but also demonstrated real-world application potential in areas like energy optimization.

Globally, IonQ expanded into Asia and Europe. It signed MOUs in Japan and South Korea with major players like Toyota Tsusho and Intellian, and acquired Switzerland-based ID Quantique to gain exposure to advanced quantum networking markets. These efforts underline IonQ’s ambition to lead not just in computing but also in quantum communications infrastructure.

The acquisitions of Lightsynq and Capella mark a significant leap forward. Lightsynq’s quantum repeater technology solves the key challenge of long-distance entanglement—a foundational block for the quantum Internet. Capella, on the other hand, adds expertise in space-based secure communication and defense contracts, giving IonQ a foothold in the high-stakes arena of satellite-based QKD (quantum key distribution).

Quantum Credibility Grows With IonQ’s Government and Academic Links

IonQ’s selection by DARPA for the Quantum Benchmarking Initiative strengthens its U.S. government credibility. With Capella’s top-secret contracting capabilities and IonQ’s growing visibility in defense and homeland security applications, the company is well-positioned to benefit from national quantum R&D funding and secure infrastructure initiatives.

It is also pushing internal R&D with innovations in quantum-enhanced machine learning and cloud-based access to its systems via AWS, which bolsters its appeal to both academic and commercial users.

IonQ’s Financial Cushion Enables Aggressive Roadmap

IonQ’s $700 million cash reserve is a major strategic asset, allowing the company to absorb operating losses while accelerating its ecosystem buildout. With this buffer, it can afford to carry out acquisitions, support high burn rates from R&D, and still maintain flexibility in execution. Unlike many early-stage tech firms, IonQ is not dependent on immediate capital raises to fund growth.

Key Risks Remain on Execution and Profitability for IonQ

Despite the promise, IonQ’s 38% increase in operating expenses and widening EBITDA losses in the first quarter are red flags. Management’s commitment to long-term growth is commendable, but execution risks tied to acquisition integration are significant. Coordinating diverse teams from Switzerland to Korea under a unified strategy is complex, and delays could affect synergy realization.

Moreover, global competition, mainly from China in areas like satellite QKD, raises the bar. IonQ must prove its commercial capabilities at scale while navigating international regulatory landscapes and partner expectations.

The quantum computing space is highly competitive, with industry giants such as IBM, Alphabet’s Google GOOGL, and Microsoft MSFT investing billions to push the boundaries of the technology. At the same time, newer entrants like Baidu, Amazon, and Rigetti Computing (RGTI) are actively seeking to establish a foothold in this fast-moving field. 

Among IonQ’s closest competitors is Quantinuum, a Honeywell-backed joint venture focused on trapped-ion systems, known for their high fidelity and commercial viability. Rigetti, while offering a full-stack superconducting quantum platform, is still in the early stages of commercialization with limited revenue. D-Wave Quantum Inc. QBTS, operating in the quantum annealing space, addresses optimization use cases with systems exceeding 1,200 qubits. Google’s Quantum AI unit continues to lead in superconducting qubit innovation, setting critical benchmarks in both scalability and quantum supremacy. Together, these players define the complex and dynamic environment in which IonQ must compete.

Monetization remains slow, with just $7.57 million in quarterly revenue. Until that number grows meaningfully, valuation concerns will remain front and center.

Analysts Show Growing Optimism for IonQ

Despite near-term losses, analysts appear more optimistic. Over the past 60 days, the Zacks Consensus Estimate for 2025 has improved sharply, with expected loss per share narrowing to 47 cents from 83 cents. The estimated figures for 2025 indicate an improvement from the year-ago figure of a loss of $1.56 per share. This positive revision trend is often a reliable signal that business conditions, or at least the outlook, are improving.

What Should Investors Do With IONQ Stock Now?

IonQ’s current valuation is undeniably high, but the company has outlined and begun executing a compelling long-term strategy. Between its government engagements, commercial traction with EPB, expanded international presence, and a robust acquisition-led roadmap, IonQ is positioning itself as more than just a quantum hardware company; it’s aiming to become the backbone of the quantum internet.

For investors who can withstand volatility and are willing to bet on long-term technological transformation, IonQ offers an asymmetric opportunity. The improving earnings outlook and sustained innovation justify its Zacks Rank #2 (Buy), even as valuation remains a concern. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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