Better Quantum Computing Stock: Rigetti Computing vs. IonQ

Source The Motley Fool

After the rapid rise of the artificial intelligence (AI) industry, the next hot sector could be quantum computing. Quantum technology holds the potential to transform industries to even greater degrees than AI.

Quantum machines use subatomic particles to perform calculations at speeds impossible for today's computers. This can enable breakthroughs in medicine, energy, manufacturing, and many other industries.

Start Your Mornings Smarter! Wake up with Breakfast news in your inbox every market day. Sign Up For Free »

Among the businesses working in the field are pure-play quantum companies Rigetti Computing (NASDAQ: RGTI) and IonQ (NYSE: IONQ). Both hold the promise of significant business growth as the quantum computer industry evolves.

Read on to learn more about Rigetti and IonQ, and see which one makes for a superior quantum computing investment.

A look at Rigetti Computing

Rigetti Computing's shares have experienced jaw-dropping performance, rising more than 300% over the past 12 months through Feb. 27. The increase was due primarily to investor optimism for quantum computing's potential.

The company's technology uses superconducting qubits, a more common quantum computing method compared to the newer trapped ion approach used by IonQ. Rigetti also employs solid-state fabrication in constructing quantum machines, which facilitates customer adoption by using existing semiconductor industry standards.

However, Rigetti suffers from the same challenges as every other quantum computing business. Subatomic particles are prone to calculation errors. This means errors must be corrected, limiting the ability of quantum devices to scale up. So while these machines hold tremendous potential, they are not capable of replacing today's computers yet.

Consequently, Rigetti's business performance has been lackluster. In the third quarter, the company reported revenue of $2.4 million, a 23% drop from 2023's $3.1 million. This represents the second consecutive quarter of year-over-year sales declines, which is a concerning trend.

Not only that, Rigetti's Q3 cost of revenue rose 41% year over year to $1.2 million. The combination of declining sales and rising costs resulted in Q3 gross profit falling nearly 50% to $1.2 million, compared to 2023's $2.3 million. As a result, Rigetti suffered a Q3 net loss of $14.8 million.

The case for IonQ

IonQ is building networking technology to solve the challenge of scaling up quantum machines. This involves linking multiple quantum computers together, the same approach used in conventional computing to create AI. Based on its business growth, the company's efforts are working, contributing to its stock surging more than 140% over the past year through Feb. 27.

IonQ's 2024 revenue rose an impressive 95% year over year to $43.1 million. This continued a trend of sales growth, with 2023's $22 million representing a 98% increase over 2022.

Revenue is poised to rise further, thanks to IonQ's progress in its quantum technology. In February, the company announced that its ion-based tech can now produce vacuums equivalent to that found on the moon.

This allows IonQ's machines to operate at room temperature, making it easier for organizations to adopt the technology. Currently, to reduce calculation errors, many competitors, including Rigetti, keep quantum computers in costly cryogenic chambers at temperatures colder than outer space.

The potency of IonQ's technology is demonstrated by the customers adopting it. These include pharmaceutical company AstraZeneca, aerospace giant Airbus, and the U.S. Air Force Research Lab.

Yet despite the revenue growth, IonQ is not profitable. It exited 2024 with a net loss of $331.6 million, more than double the $157.8 million loss in 2023.

As with Rigetti's situation, rising costs are a concern. So on Feb. 26, IonQ announced it was raising more capital through an equity offering. This contributed to its stock dropping, since it causes dilution to existing shareholders.

Its finances may be a factor in IonQ also introducing a new CEO on Feb. 26, former physicist and board member Niccolo de Masi. He is an experienced CEO, having served in that role at the SPAC that took IonQ public.

Choosing between Rigetti and IonQ

After examining both Rigetti and IonQ, it looks like the better quantum computing investment right now is IonQ. Rigetti's weak sales in the past couple of quarters, compared to IonQ's rapidly rising revenue, is a key factor, indicating the latter's ion-based tech is proving successful at attracting customers.

That said, both IonQ and Rigetti are pricey stocks. Here's a look at each's price-to-sales (P/S) ratio, which measures how much investors are willing to pay for every dollar of revenue.

IONQ PS Ratio Chart

Data by YCharts.

The P/S multiple for both stocks surged in recent months, and although there's been a drop, this metric is still higher than it's been throughout most of 2024. As a result, it's worth waiting for IonQ shares to drop further before deciding to buy.

Note that investing in either company holds substantial risk, given the current challenges with quantum tech. Only investors with a high risk tolerance should consider purchasing shares.

Should you invest $1,000 in IonQ right now?

Before you buy stock in IonQ, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and IonQ wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $765,576!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*. Don’t miss out on the latest top 10 list, available when you join Stock Advisor.

See the 10 stocks »

*Stock Advisor returns as of March 3, 2025

Robert Izquierdo has positions in IonQ. The Motley Fool recommends AstraZeneca Plc. The Motley Fool has a disclosure policy.

Disclaimer: For information purposes only. Past performance is not indicative of future results.
placeholder
Bitcoin Price Bounces Back—Can It Finally Break Resistance?Bitcoin price started a recovery wave above the $83,500 zone. BTC is now consolidating and might struggle to settle above the $85,500 zone. Bitcoin started a decent recovery wave above the $83,500
Author  NewsBTC
Apr 02, Wed
Bitcoin price started a recovery wave above the $83,500 zone. BTC is now consolidating and might struggle to settle above the $85,500 zone. Bitcoin started a decent recovery wave above the $83,500
placeholder
U.S. March Nonfarm Payroll Preview: Even If Data Aligns with Expectations, Financial Markets May Not Escape the Fate of VolatilityOn 4 April 2025, the United States will release its March Nonfarm Payrolls (NFP) data. The market consensus currently anticipates job growth of 128,000, a decline from February’s 151,000 (Figure 1). W
Author  TradingKey
Apr 02, Wed
On 4 April 2025, the United States will release its March Nonfarm Payrolls (NFP) data. The market consensus currently anticipates job growth of 128,000, a decline from February’s 151,000 (Figure 1). W
placeholder
Bitcoin Price Forecast: Tariff volatility sweeps over $200 billion from crypto marketsBitcoin (BTC) price hovers around $83,000 at the time of writing on Thursday after it failed to close above a critical resistance level the previous day.
Author  FXStreet
Yesterday 10: 31
Bitcoin (BTC) price hovers around $83,000 at the time of writing on Thursday after it failed to close above a critical resistance level the previous day.
placeholder
Gold Price Forecast: XAU/USD holds positive ground above $3,100, all eyes on US NFP dataGold price (XAU/USD) recovers some lost ground to near $3,115 during the late American session on Thursday after facing some profit-taking in the previous session.
Author  FXStreet
11 hours ago
Gold price (XAU/USD) recovers some lost ground to near $3,115 during the late American session on Thursday after facing some profit-taking in the previous session.
placeholder
Nonfarm Payrolls forecast: US job growth set to ease in March amid economic uncertaintyThe all-important United States (US) Nonfarm Payrolls (NFP) data for March will be released by the Bureau of Labor Statistics (BLS) on Friday at 12:30 GMT.
Author  FXStreet
6 hours ago
The all-important United States (US) Nonfarm Payrolls (NFP) data for March will be released by the Bureau of Labor Statistics (BLS) on Friday at 12:30 GMT.
goTop
quote