IonQ (IONQ) stock is trending higher on Tuesday after closing up 15% on Monday following news that SkyWater (SKYT), a U.S.-based chip foundry, received shareholder approval for its merger with IonQ. The move comes just days after IonQ reported strong Q1 results, including revenue growth of nearly 755% year-over-year to $64.7 million. However, despite the sharp growth, two firms, J.P. Morgan and Morgan Stanley, remain cautious on IONQ due to valuation concerns, rising competition, and uncertainty over how fast quantum computing can become a widely used business technology.
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J.P. Morgan Remains Neutral on Valuation Concerns
Following the earnings results, top J.P. Morgan analyst Peter Peng raised his price target on IonQ stock to $50 from $42 but maintained a Neutral rating. The analyst praised the company’s strong execution, improving revenue outlook, and progress toward its next-generation 256-qubit quantum system.
However, Peng said the stock’s risk-reward profile currently looks balanced after the recent rally. J.P. Morgan noted that IonQ continues to trade at a steep valuation despite the company still operating at large losses and facing high research and development costs.
The firm also pointed out that commercial advantages from quantum computing remain limited for now, while competition continues to increase from major players like Amazon (AMZN), Alphabet (GOOGL), Microsoft (MSFT), and IBM (IBM).
Morgan Stanley Also Takes a Wait-and-See Approach
Likewise, top Morgan Stanley analyst Joseph Moore raised his price target on IonQ to $48.50 from $47 but kept an Equal-weight rating on the stock. The analyst acknowledged that revenue trends remain strong and that IonQ continues to beat expectations. Morgan Stanley also highlighted encouraging progress on IonQ’s technology roadmap, including its upcoming 256-qubit system and growing customer engagement.
Still, the firm said uncertainty around the long-term winner in quantum computing remains high. Morgan Stanley added that while IonQ’s ion-trap technology shows promise, the broader quantum market is still in its early stages and commercial leadership remains unclear.
The firm also warned that scaling quantum systems to thousands of qubits remains a significant technical challenge.
Is IONQ a Good Stock to Buy?
Despite the stock’s recent rally, the Street still sees more room for gains. Based on 12 analysts, IonQ has a Strong Buy rating, with nine Buy ratings and three Holds. The average IONQ stock price target is $64.13, indicating about 12.72% upside from the last price.
