IONQ’s Breakthrough Ignites Quantum Computing Stocks

Quantum Computing Breakthrough

Please click here for an enlarged chart of IONQ Inc (NYSE:IONQ).

Note the following:

• This article is about the big picture, not an individual stock. The chart of IONQ is being used to illustrate the point of a major technological breakthrough in the important technology of quantum computing.
• The chart shows that IONQ is in zone 1 (resistance).
• The chart shows that IONQ stock is jumping on a major breakthrough.
• The chart shows zone 2 (support) is far away.
• RSI on the chart shows the stock is overbought.
• The big, real world problem with quantum computing has been the errors. 
• IONQ stock is jumping after IonQ demonstrated that a standard CPU could keep pace with the real time error decoding demands of simulated fault tolerant quantum workloads involving as many as 408 logical qubits and more than 31 million operations.
• In our analysis, the breakthrough suggests that the conventional computing required to correct quantum errors may not become the major scaling bottleneck many had feared.  However, investors need to remain skeptical until more details are available.
• There are several quantum computing technologies.  At this time, it is not known which technology will win out.
• IonQ and Quantinuum Inc (QNT) both use trapped ion technology, in which electrically charged atoms serve as qubits and are controlled with lasers.  Trapped ion systems generally offer very high accuracy and flexible connectivity, although they operate more slowly than superconducting systems.  In this case, the slower operating cycle gave IonQ’s ordinary CPU considerably more time to decode errors.
• The breakthrough comes as the Quantum World Congress begins today.  The congress may bring more news and more developments that can move quantum computing stocks such as IBM Common Stock (IBM), Rigetti Computing Inc (RGTI), D-Wave Quantum Inc (QBTS), Quantum Computing Inc (QUBT), and Infleqtion inc (INFQ).
• As a full disclosure, there is a new signal on IONQ in our Buy report.
• After a significant run starting late last week.  AI stocks are taking a breather this morning as some investors take profits.  Money flows show that the primary reason for the torrid run has been the momo crowd front running earnings season.  The first test will come when Micron Technology Inc (MU) report earnings on September 30.  As a full disclosure, we are long MU from an average of $21.77.
• Prudent investor should note the following:
  •  When Micron reported earnings last quarter, the stock first ran up and then quickly dropped 41% intraday.
  • The drop came in spite of Micron beating earnings consensus by 20%, revenue consensus by 15%, and earnings guidance consensus by 20%.
  • In our analysis, as we previously shared, the reason MU stock fell in spite of stellar earnings was very positive positioning ahead of earnings.  When positioning is very positive, it is like everyone being on the same side of the boat.  Minor turbulence can capsize the boat.
  • In our analysis, so far positioning in MU stock this time is positive but not very positive.
  • Micron whisper numbers continue to move higher.  Stocks move based on the difference between reported numbers and whisper numbers.
• In our analysis, it is important for investors to watch money flows, positioning, and whisper numbers on Micron as they progress to September 30.  The result will have implications for the entire AI trade, not just MU, and in turn for the entire stock market.