IonQ, Inc. (IONQ 13.77%) saw its shares rise by 11.6% this week through Thursday, based on data from S&P Global Market Intelligence.
Although IonQ didn’t release any news this week, quantum computing stocks continued their impressive upward trend from recent months. This surge is partly due to positive feedback from several Wall Street analysts about the technology and IonQ in particular.
Morgan Stanley and D.A. Davidson Show Support
On Monday, Joseph Moore from Morgan Stanley raised his price target for IonQ from $14.90 to $37. He stated, “While we can’t pinpoint a specific reason for this kind of stock increase in the sector, we do see continuous signs that investment in quantum computing will grow rapidly.”
There has been a noticeable spike in interest in quantum computing stocks since late summer, which has only intensified recently. Last week, IonQ became the first quantum computing company to showcase its technology at the New York Stock Exchange. Additionally, Alphabet (GOOG 0.26%) introduced its new quantum computing chip called Willow, which also seems to have positively impacted quantum stocks.
Later in the week, on Thursday, another Wall Street firm, D.A. Davidson, started coverage on IonQ with an optimistic outlook and a $50 price target. The analysts praised IonQ’s unique approach, noting that its “trapped-ion qubit architecture offers IonQ greater reliability, accuracy, and scalability compared to competitors.”
IonQ’s Risks After Recent Gains
Investors are beginning to anticipate the commercial use of quantum applications in the near future, rather than viewing quantum computing as just an advanced science project.
However, it could still be several years before quantum technology is widely deployed, and there are currently no strong financial foundations for investors to rely on regarding these quantum stocks. Therefore, IonQ’s recent surge and the quadrupling of its stock price since October make it susceptible to a decline if traders lose patience or if the overall sentiment shifts.
Even the D.A. Davidson report was part of their new “DaVinci” initiative, which uses a venture capital approach to determine price targets. This approach focuses on technology over financial metrics and acknowledges that these stocks are much more “speculative” than others the firm analyzes.
Overall, investors should be very cautious about jumping into this speculative rally.
Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Billy Duberstein and/or his clients have positions in Alphabet. The Motley Fool has positions in and recommends Alphabet. The Motley Fool has a disclosure policy.
