We are short shares of IonQ, a $5 billion quantum computing company whose stock has tripled in recent months as retail investors, chasing the “next AI” trade, piled into an industry that has long been plagued by overpromises and hype. Despite retreating from all-time highs, shares still trade at a staggering 40x consensus 2026E revenue – a valuation that defies both logic and the warnings of former IonQ employees, who highlighted monumental scaling challenges that will derail the company’s ambitious plans. We believe IonQ is far from being on the verge of a new era of commercial success with its limited, error-prone systems. Instead, investors seduced by IonQ’s claimed “history of delivering on technical and commercial milestones” are fixated on relatively immaterial past achievements, while ignoring the existential challenge all early-stage computing companies face: scalability.

IonQ has painted a picture of exponential growth, forecasting a leap from ~80-100 physical qubits today to over 4,000 by 2026 and 32,000 by 2028. To achieve this, the company is banking on photonic interconnects to link its trapped-ion computing modules. Yet, despite over a decade of research and development, commercially viable photonic interconnects remain a distant prospect. IonQ has not been fully transparent with investors about the status of its photonic interconnect development, never disclosing performance metrics for this critical technology. However, recent data from the academic labs IonQ relies on for R&D reveal continued inefficiencies and abysmally slow speeds. A year ago, IonQ claimed it was “on track to finish” developing photonic interconnects by 2024, but industry executives we consulted confirmed that performance remains far below the threshold necessary for commercial scaling. Rather than reflecting a strategic shift, the looming inability to deliver on growth promises is what has driven IonQ’s recent pivot into quantum networking, the need to raise additional equity despite prior assurances to the contrary, and other material changes to its technology benchmarks, financial reporting, and management, as announced late last month.

IonQ’s lack of transparency is hardly new and widely recognized within the industry. Recently departed CEO Peter Chapman had a history of making bold claims that diverged from reality. In October 2020, Chapman claimed to have a system with “32 perfect qubits” when a former IonQ executive confirmed to us the company only had an 11-qubit machine at the time. That same year, Chapman also predicted IonQ would develop desktop quantum computers and achieve “broad quantum advantage across a wide variety of use cases” by 2025. Experts we spoke with viewed IonQ’s assertion that its Tempo system will represent a “ChatGPT moment” as similarly outlandish – the device will instead be a “toy” incapable of providing meaningful commercial value. Throughout our research, we encountered consistent concern from experts about the gap between IonQ’s market reputation and its standing within the industry as a purveyor of hype.

A cash-burning, highly promotional company in a hot sector valued at absurd revenue multiples, with retail investors piling in and ignoring critical scaling challenge – even as the CEO unloads $37m worth of stock – are hallmarks of a disaster in the making. Quantum computing may hold transformative potential someday, but the path is long, uncertain, and fiercely competitive with better-resourced players (both in quantum and classical computing) vying for dominance. Based on our research, IonQ is not even the clear leader among ion trap-based quantum computing providers. As reality sets in, IonQ shareholders chasing a quantum leap will find themselves wishing they had stayed in a more stable state.

Read our full report here.