Better Quantum Computing Stock: Alphabet vs. IonQ

One pocket of the artificial intelligence (AI) realm that is fetching a fair amount of attention right now is quantum computing. While there are many companies exploring quantum computing, only a finite number have made any measurable progress.

Two companies that are emerging as leaders in this new field are IonQ (NYSE: IONQ) and Alphabet (NASDAQ: GOOG) (NASDAQ: GOOGL). Through market close on Dec. 13, shares of IonQ have skyrocketed by 173% this year -- absolutely trouncing Alphabet's return of 36%.

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Could IonQ be on the verge of leapfrogging one of the most influential players in the technology world? Let's explore the ins and outs of how each company is developing quantum computing, and from there assess which stock could be the better buy.

What is quantum computing?

At its core, quantum computing is a technology that leverages quantum mechanics in order to bring a new level of speed and efficiency when solving complicated problems. By today's standards, data is stored in computers in binary bits (0s or 1s). By contrast, quantum computers rely on qubits (quantum bits), which essentially allow data values to exist in different states at the time -- a phenomenon known as superposition.

Without getting overly technical, the idea behind quantum is that these computers should have the ability to process data and derive solutions to problems that could take years or even decades to figure out using today's existing infrastructure.

Image source: Getty Images.

A look at IonQ

IonQ specializes in a niche area of the quantum computing realm known as trapped ion technology. Simply put, IonQ uses lasers to manipulate ions that represent the quantum bits. According to the company, this approach can result in lower error rates when processing data -- thereby speeding up process times for monumentally sophisticated applications.

At the moment, IonQ relies on a robust partner network with cloud computing providers such as Microsoft, Amazon, and Google. Essentially, software developers leveraging these cloud networks can access IonQ's quantum computing services -- thereby saving themselves the time required to research and build this type of hardware themselves.

On the surface, it may look like IonQ is on the verge of some pretty lucrative disruption. However, a quick glance at the company's financial statements tells a different story.

While the slope of IonQ's revenue trend line is steepening, the company still has only generated $37.5 million of sales over the last year. To me, this subtly implies that quantum computing is still very much an emerging theme and demand for the technology is not overly robust yet. Furthermore, IonQ isn't even close to profitable -- in fact, the company's net losses are actually steepening despite accelerating revenue.

IONQ Revenue (TTM) data by YCharts

A look at Alphabet

Alphabet's subsidiary Google is primarily known for its dominant presence among internet search tools. However, Google has a lot of special projects behind the scenes that rarely make it into the spotlight. One such area is quantum computing, in which Google has made some notable progress over the last several years.

Back in 2019, Google's quantum processor, known as Sycamore, solved a problem in 200 seconds that it estimated would take a supercomputer 10,000 years to solve. Given this breakthrough, Google claimed quantum supremacy -- or the idea that demonstrates the advantages of quantum computing over today's computing standards.

Earlier this month, Google announced another development from its quantum roadmap -- a chip the company is calling Willow. According to the press announcement, Willow's architecture allows for more efficient control of qubits -- thereby allowing reduced error rates even as a rising number of qubits enter the equation.

In layman's terms, the Willow chip is so powerful that it has the ability to solve a benchmarking problem in less than five minutes that would take today's best supercomputers 10 septillion years to complete.

The bottom line

While IonQ and Alphabet have made some notable strides in quantum computing, it's clear that there's a long road ahead for both companies. Quantum computing is far from a commercially available technology, and it likely won't become mainstream for at least another decade (at the earliest). I think it's highly likely that IonQ, Alphabet, and their competitors will continue spending hefty sums in research and development (R&D) into further quantum initiatives over the next several years.

With that said, Alphabet has the luxury of being able to fund these growth efforts without sacrificing its major sources of revenue from advertising, search, and cloud computing. By contrast, IonQ's financial resources are limited, and the company's approach to quantum computing could still be argued as speculative at the moment.

For these reasons, I see Alphabet as the clear winner despite the stock not moving as much based on news over its breakthroughs in quantum computing alone.

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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. Adam Spatacco has positions in Alphabet, Amazon, 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.