Better Artificial Intelligence Stock: IonQ vs. Nvidia

In the rapidly evolving world of artificial intelligence (AI), two companies have emerged as front-runners in the race to harness the power of advanced computing: IonQ (IONQ) and Nvidia (NVDA). Both companies have seen their stocks soar in recent months, but which one is the better investment for the long term? Let's take a closer look at each company and their respective technologies to determine which AI stock is the better choice.

IonQ: Quantum Computing's Promising Future
IonQ is a quantum computing company that has developed a unique approach to trapping ions for quantum computing processing. This technology allows IonQ to create linear chains of ions with the potential to reach 100-plus qubits, which could lead to more powerful and accurate quantum computers. IonQ's quantum computers can perform complex calculations in seconds that would take years for a traditional computer, making them ideal for industries such as drug discovery, optimization problems, and cryptography.

IonQ's fourth-quarter revenue jumped 92% to $11.7 million, and the company has a growing customer base that includes Oak Ridge National Laboratory. McKinsey estimates that quantum computing could be worth $2 trillion by 2035, presenting a massive opportunity for IonQ to capitalize on the growing demand for quantum computing technology.

However, IonQ is still unprofitable, with a net loss of $202 million in the fourth quarter. The company's shares have a price-to-sales ratio of 167, which is very expensive by any measure. While quantum computing could become the next biggest tech trend, it's still very uncertain if IonQ's business will significantly benefit from it and how long that might take.

Nvidia: AI's Dominant Chipmaker
Nvidia is a semiconductor company that has soared 53% over the past year as companies have clamored for its processors amid rising AI demand. Nvidia's AI accelerators have an estimated 70% to 95% of the artificial intelligence chip market, and the company's data center revenue jumped 93% to $35.6 billion in the fourth quarter of fiscal year 2025. Nvidia's high gross margin of 78% is a stunningly high number for a hardware company, underscoring its pricing power and dominance in the AI chip market.

Nvidia's position in the AI chip market has been described as a moat by some experts, and its flagship AI graphics processing units (GPUs), such as the H100, coupled with the company's CUDA software, have given it a significant head start on the competition. However, Nvidia CEO Jensen Huang has acknowledged that there are many powerful competitors on the rise, and he is concerned about the company losing its edge.

Nvidia is the Better AI Stock
Nvidia is the better AI stock for several reasons. First, its dominance in the AI chip market is a significant advantage, with an estimated 70% to 95% market share. This market share, coupled with its high gross margin, indicates that Nvidia is well-positioned to continue benefiting from the growing demand for AI chips.

Second, Nvidia's strong brand and reputation in the AI chip market make it an attractive choice for customers looking to invest in AI technology. The company's commitment to releasing new AI chip architectures and software every year, rather than every other year, demonstrates its dedication to staying ahead of the competition and maintaining its competitive edge.

Finally, Nvidia's profitability and valuation make it a more attractive investment option compared to IonQ. While IonQ's revenue is growing, it is still unprofitable, and its shares are very expensive relative to its sales. Nvidia, on the other hand, is profitable and has a more reasonable valuation, with a price-to-sales ratio of 30.

In conclusion, while IonQ's quantum computing technology holds promise for the future, Nvidia's dominance in the AI chip market, strong brand, and commitment to innovation make it the better AI stock for long-term investors. Nvidia's high gross margin, market share, and profitability indicate that it is well-positioned to continue benefiting from the growing demand for AI chips, making it an attractive choice for investors looking to capitalize on the secular trend of AI.