Comparing Quantum Computing Stocks: IonQ vs. Rigetti Computing

When discussing the artificial intelligence (AI) market, most investors focus on well-known companies like Nvidia, or software innovators like OpenAI. However, a growing area that can also benefit from AI is quantum computing, which is often overlooked.

Quantum computers have a unique ability to handle binary data (zeros and ones) simultaneously, unlike traditional computers, which manage those bits one at a time. This feature allows quantum computers to process massive amounts of data much faster. However, they are still relatively large and expensive, and they tend to generate more errors than conventional computers, making them less common in AI applications compared to high-end GPUs.

In the coming years, quantum computing companies aim to make their chips smaller, reduce error rates, and lower manufacturing costs. They are also working towards providing more quantum computing capabilities through cloud services. These advancements may enhance their usefulness in demanding AI tasks.

Two key players in the quantum computing field are IonQ (IONQ) and Rigetti Computing (RGTI). We will evaluate which of these companies could represent a stronger investment opportunity.

Comparing IonQ and Rigetti

IonQ offers three different types of quantum computing systems: the premium Aria system, the business-oriented Forte system, and the on-premise Forte Enterprise. Additionally, IonQ provides its quantum computing services via cloud platforms. The company primarily serves large government entities and academic institutions.

A noteworthy development for IonQ is its pursuit of "trapped ion" technology, which has the potential to significantly reduce the size of quantum processing units (QPUs) from feet to mere inches. This miniaturization could lead to the creation of more affordable and powerful quantum systems in the future.

Despite a setback with the departure of co-founder and chief scientist Chris Monroe, known for his work on trapped ion technology, IonQ has continued its expansion by installing new systems, signing government contracts, and establishing AI partnerships.

On the other hand, Rigetti develops its own QPUs and offers a platform called Forest, which allows developers to create quantum algorithms. This all-in-one approach positions Rigetti as a "full stack" quantum computing company.

Like IonQ, Rigetti aims to create more cost-effective and scalable QPUs for commercial applications. However, the sudden resignation of founder Chad Rigetti from his executive roles in late 2022 raised concerns. Despite that, Rigetti introduced two significant products shortly after, including the Novera QPU, which is a 9-qubit commercial quantum computer priced at $900,000, along with their first 84-qubit Ankaa-3 system, designed to effectively reduce processing errors.

Future Prospects for IonQ and Rigetti

Both companies went public through mergers with special purpose acquisition companies (SPACs) but fell short of their initial revenue estimates. In 2023, IonQ reported $22 million in revenue, lower than its goal of $34 million, while Rigetti also underperformed with only $12 million in revenue compared to its original guidance of $34 million.

Nonetheless, both companies saw their stock prices peak in December 2024, as investors reacted positively to their advancements. Analysts project IonQ's revenue to grow at a remarkable compound annual growth rate (CAGR) of 89%, reaching $148 million by 2026, while Rigetti's revenue is expected to grow at a CAGR of 43%, reaching only $35 million.

Both companies are likely to remain unprofitable in the near future and may continue to dilute their shares to raise funds and cover compensation costs. IonQ has only increased its shares by 10% since its SPAC merger, whereas Rigetti's shares have risen by 69% since its debut.

IonQ has a valuation of about $8.8 billion, translating to 59 times its estimated 2026 sales, while Rigetti, with a valuation of $4.3 billion, represents an astonishing 123 times its projected sales for the same year.

Conclusion: IonQ vs. Rigetti

According to industry insights, the quantum computing market is projected to grow at a CAGR of 34.8% from 2024 to 2032, fueled by advancements in chip technology and error management. Both IonQ and Rigetti stand to gain from this growth trend, but potential investors should be cautious about their high valuations. IonQ, with its superior scale, faster growth rates, less dilution, and better valuation, currently appears to be the more promising investment option compared to Rigetti.

Note: The author has no positions in the stocks mentioned. Investors should conduct their own research before making investment decisions.

Quantum, Computing, Investing