Better Quantum Computing Stock: IonQ vs. Rigetti Computing
AInvestSunday, Jan 5, 2025 8:10 pm ET
5min read
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In the rapidly evolving field of quantum computing, two companies have emerged as leading contenders in the race to commercialize this cutting-edge technology: IonQ (IONQ) and Rigetti Computing (RGTI). Both companies have made significant strides in developing quantum computers, but they differ in their technological approaches and business strategies. Let's compare these two early movers and determine which might be the better investment.

IonQ: Trapped Ion Technology and Cloud Accessibility

IonQ uses trapped ion technology to manipulate individual atoms for quantum computation. Its qubits utilize the quantum state of a single ytterbium atom suspended by electromagnetic fields, providing high stability and strong connectivity between qubits. This method allows for a high degree of control and stability, resulting in industry-leading fidelities exceeding 99%. IonQ's qubits have a coherence time of 500 microseconds, compared to Rigetti's 40 microseconds, indicating that IonQ's qubits have a longer lifespan and are less prone to errors.

IonQ focuses on providing cloud-based access to its quantum processors, allowing users to run algorithms without needing to buy and maintain specialized equipment. This approach makes quantum computing more accessible to a broader range of users, including those without extensive quantum computing expertise. IonQ's cloud-based services provide users with a seamless and reliable experience when running quantum algorithms.

Rigetti: Superconducting Qubits and Hybrid Model

Rigetti uses superconducting circuits to create its qubits on silicon chips. This architecture draws on technology from classical computing for potentially easier scalability. Rigetti's long-term plan is for an integrated system combining a quantum processor with a traditional computer, allowing users to optimize algorithms and interpret output from the quantum chip using a traditional computer.

Rigetti operates on a hybrid business model, offering cloud access to its quantum computers while also working directly with enterprise customers to install Rigetti quantum processing units in on-site data centers. This approach caters to a wider range of user preferences and requirements, providing flexibility in deployment options. Rigetti's hybrid model allows it to work directly with customers to optimize algorithms and interpret output from the quantum chip, providing a more seamless integration with existing computing workflows.

Performance and Market Penetration

Both companies have world-class fidelities, but IonQ's ion traps have a clear edge in qubit lifetimes. Rigetti recently announced plans to release a 416-qubit system in 2024, which could provide users with more computational power and the ability to tackle larger and more complex problems. However, IonQ's longer coherence times give it an edge in overall stability and error rates.

Rigetti's hybrid model allows it to cater to a wider range of customers with different needs and preferences. This approach enables Rigetti to tap into both the growing demand for cloud-based quantum computing services and the needs of enterprise customers who prefer to have quantum processing power on-site in their data centers. By providing on-site QPUs, Rigetti can attract customers who require low-latency quantum computing capabilities or have strict data privacy and security concerns. This allows Rigetti to penetrate the market more deeply and capture a larger share of the quantum computing market compared to IonQ, which focuses solely on cloud-based services.

Revenue Growth and Valuation

Both companies have missed their rosy pre-merger estimates, but they have since hit their all-time highs as the bulls applauded their recent progress. From 2023 to 2026, analysts expect IonQ's revenue to grow at a compound annual growth rate (CAGR) of 89% to $148 million, and for Rigetti's revenue to increase at a CAGR of 43% to $35 million.

Both companies are expected to stay unprofitable for the foreseeable future, and they could keep diluting their own shares to raise cash and cover their stock-based compensation expenses. IonQ has only increased its share count by 10% since its SPAC merger, while Rigetti has boosted its share count by 69% since its debut.

Both stocks are richly valued, with IonQ trading at 59 times its estimated sales for 2026 and Rigetti at a whopping 123 times its projected sales for 2026.

Which Company Has a Brighter Future?

The quantum computing market could still expand at a CAGR of 34.8% from 2024 to 2032, with smaller chips and more efficient error detection rates. IonQ and Rigetti could benefit from that secular expansion, but investors should be mindful of their soaring valuations. I wouldn't rush to buy either of these speculative stocks, but if I had to choose one, I would lean toward IonQ due to its stronger commercialization efforts and more stable financial situation.




In conclusion, both IonQ and Rigetti have made significant strides in developing quantum computers, but they differ in their technological approaches and business strategies. IonQ's trapped ion technology and cloud accessibility provide users with a seamless and reliable experience, while Rigetti's superconducting qubits and hybrid model cater to a wider range of user preferences and requirements. Both companies have world-class fidelities, but IonQ's ion traps have a clear edge in qubit lifetimes. Rigetti's hybrid model allows it to penetrate the market more deeply and capture a larger share of the quantum computing market compared to IonQ. However, both companies are expected to stay unprofitable for the foreseeable future, and they could keep diluting their own shares to raise cash and cover their stock-based compensation expenses. Investors should be mindful of their soaring valuations and consider their financial situations before making an investment decision.
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