Investing in Quantum Computing: Will IonQ or Rigetti Lead the Charge?

While the spotlight often shines on tech giants like Nvidia and Microsoft, the quantum computing market is emerging as a significant player in the AI sector. This technology, distinct from traditional computing, could reshape data processing.

Quantum computers can handle binary bits of zeros and ones all at once, unlike traditional machines that manage them one at a time. This capability allows quantum systems to tackle vast data sets rapidly. Still, their size, high costs, and error rates hinder widespread use, particularly in AI applications where high-performance GPUs dominate. However, a shift is underway as quantum companies innovate to make their technology more efficient.

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In the next few years, organizations in quantum computing plan to make their chips smaller, reduce errors, and cut production costs. Additionally, they will offer more cloud-based services, enhancing their appeal for demanding AI needs.

Two notable companies in this space, IonQ (NYSE: IONQ) and Rigetti Computing (NASDAQ: RGTI), are worth examining to see which might offer better investment opportunities.

Comparing IonQ and Rigetti

IonQ produces three types of quantum systems: the high-end Aria system, the commercial-grade Forte system, and the Forte Enterprise for on-premise use. The company offers these systems along with cloud-based quantum power, primarily targeting large government clients and universities.

IonQ is advancing its “trapped ion” technology, which could reduce quantum processing unit (QPU) sizes significantly. However, the departure of co-founder Chris Monroe last year raised concerns. Despite that setback, IonQ has maintained its growth trajectory by expanding its systems and securing new contracts.

Rigetti, in contrast, designs its own QPUs and allows developers to create quantum algorithms on its Forest cloud platform, establishing itself as a “full stack” quantum company.

The company shares a goal with IonQ of producing more affordable and scalable QPUs. Following the unexpected resignation of founder Chad Rigetti from key positions in December 2022, some investors were left wary. Nevertheless, Rigetti has rolled out significant products, including the Novera QPU, a 9-qubit model priced at $900,000, and the recently launched 84-qubit Ankaa-3 system, which minimizes processing errors and promises future developments.

Assessing Future Potential

Both IonQ and Rigetti became public through mergers with special purpose acquisition companies (SPACs). Unfortunately, both companies fell short of their initial revenue targets, with IonQ recording just $22 million in 2023 versus a goal of $34 million, while Rigetti brought in only $12 million, also missing the same projection.

Interestingly, both stocks reached their highest points in December 2024 as investor optimism increased following their achievements. Analysts predict significant revenue growth for IonQ, expecting an 89% compound annual growth rate (CAGR), potentially reaching $148 million by 2026. Rigetti’s forecasted growth, at a 43% CAGR, suggests revenue could hit $35 million.

Nevertheless, both companies are anticipated to remain unprofitable in the near term. IonQ has increased its share count by 10% since its SPAC merger, but Rigetti has seen a 69% rise in shares post-initial public offering.

Both companies carry high valuations, with IonQ’s enterprise value at $8.8 billion, translating to 59 times its expected sales for 2026. Rigetti’s valuation stands at $4.3 billion, equating to a staggering 123 times projected sales.

Investment Preference: IonQ

The quantum computing market is projected to grow at a CAGR of 34.8% from 2024 to 2032, driven by advancements in chip technology and error detection. While both IonQ and Rigetti could benefit from this growth, caution is advised due to their current valuations. IonQ emerges as the more favorable investment choice due to its larger scale, stronger potential growth, lesser share dilution, and more reasonable valuation compared to Rigetti.

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Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Microsoft and Nvidia. The Motley Fool recommends Broadcom and following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are solely those of the author and do not reflect those of Nasdaq, Inc.