Higher Synthetic Intelligence Inventory: IonQ vs. Nvidia

Two high-flying synthetic intelligence (AI) shares which were entrance of thoughts for traders not too long ago are IonQ (IONQ -5.94%) and Nvidia (NVDA -8.69%). Semiconductor firm Nvidia has soared 53% over the previous 12 months as firms have clamored for its processors amid rising AI demand. In the meantime, the share value of quantum computing firm IonQ spiked about 125% over the identical interval, with traders hopeful that IonQ’s tech will advance AI capabilities.

AI could possibly be value an estimated $15.7 trillion by 2030, in keeping with PwC, and with these firms on the forefront of those huge developments, it is value asking which is the higher AI inventory proper now. Here is the case for every.

Picture supply: Getty Photos.

Nvidia’s AI alternative is entrance and heart

Nvidia wants no introduction amongst tech traders, however in the event you’re nonetheless making an attempt to determine why this firm is getting a lot airtime within the AI dialog, think about these information:

• Nvidia’s AI accelerators have an estimated 70% to 95% of the bogus intelligence chip market.
• The corporate’s information heart income jumped 93% to $35.6 billion within the fourth quarter of fiscal 12 months 2025, which ended Jan. 26.
• Information heart spending may improve to $2 trillion over the subsequent 5 years.

These are all compelling causes to personal Nvidia inventory as a result of they show simply how a lot the corporate is already benefiting from AI’s rise and its potential to continue to grow within the years forward. For instance, Nvidia’s AI processor market share signifies that opponents like Superior Micro Units have a slim probability of encroaching on its chip territory any time quickly.

Equally, with tech giants committing lots of of billions of {dollars} to information heart spending, Nvidia is probably going one of many largest winners. Meta Platforms, Alphabet, Microsoft, and others have all stated they’re going to spend lots of of billions this 12 months alone, with the aim of constructing out information heart infrastructure that may sustain with the calls for of AI.

Some individuals suppose DeepSeek‘s current revelation that some AI start-ups can prepare AI fashions with fewer and fewer highly effective AI processors spells doom for Nvidia. I disagree. Contemplating that DeepSeek’s AI probably realized from extra superior AI fashions (often known as distillation), it reveals that giant tech firms cannot afford to fall behind in information heart spending as smaller rivals nip at their heels.

The very fact stays that as AI information infrastructure demand will increase, firms will look to Nvidia to fill their processor wants. The corporate not too long ago debuted a brand new Blackwell AI processor to maintain tempo with demand, and administration stated on the newest earnings name that gross sales have “exceeded our expectations” and reached $11 billion within the fourth quarter.

In brief, Nvidia is on the forefront of the present AI increase, and whereas nothing lasts endlessly, it is untimely to suppose it is finished benefiting from it.

IonQ is betting on an enormous quantum computing future

Whereas quantum computing and AI aren’t the identical factor, there’s typically overlap between the 2. For instance, IonQ’s quantum computing system is utilized by Microsoft and Amazon to provide AI researchers entry to quantum computing fashions.

There are some compelling the reason why some traders are enthusiastic about IonQ proper now:

• The corporate’s strategy to trapping ions for quantum computing processing is a novel strategy to the trade.
• IonQ’s fourth-quarter income jumped 92% to $11.7 million.
• McKinsey estimates quantum computing could possibly be value $2 trillion by 2035.

IonQ says that its quantum computer systems can create linear chains of ions with the potential to achieve 100-plus qubits (a quantum pc’s unit of processing), and that it may have far fewer errors than different quantum computer systems.

The long-term prospects with IonQ comes from the potential that quantum computing could possibly be a transformational expertise that advances science, like drug discovery, and creating new AI fashions. Whereas speculative, large tech firms are pursuing quantum computing, together with Alphabet and Microsoft, with the latter not too long ago releasing its personal quantum computing processor.

Wanting on the large image, quantum computing has huge potential to disrupt conventional computing within the coming many years. However its sensible purposes are restricted proper now. Nvidia CEO Jensen Huang threw chilly water on the trade not too long ago when he stated that their sensible purposes are nonetheless many years away.

Nvidia is the higher AI inventory

IonQ falls quick on this matchup as a result of its alternatives are too speculative, and its inventory is just too costly. The corporate’s shares have a price-to-sales ratio of 167, which may be very costly by any measure. And whereas IonQ’s income is rising, it is nonetheless unprofitable, with a web lack of $202 million within the fourth quarter.

Whereas quantum computing may grow to be the subsequent largest tech development, it is nonetheless very unsure if IonQ’s enterprise will considerably profit from it and the way lengthy that may take. In the meantime, its shares are priced for perfection.

In distinction, Nvidia’s shares are comparatively effectively priced, with a ahead price-to-earnings a number of of 30. The corporate may be very worthwhile, with usually accepted accounting rules (GAAP) earnings per share of $0.89 in the latest quarter — an 82% improve from the year-ago quarter.

For all these causes, Nvidia seems to be like the higher AI inventory by far proper now.