Better Artificial Intelligence Stock: IonQ vs. Rigetti Computing

When discussing opportunities in the artificial intelligence (AI) market, many investors tend to concentrate on companies like Nvidia that manufacture GPUs, or those that develop generative AI software such as OpenAI. Cloud services giants like Microsoft and chip manufacturers like Broadcom also often make it to the investor radar. However, it can be easy to overlook the emerging quantum computing sector, which is already beginning to feel the positive influence of AI.

Quantum computers differ from traditional computers because they can process binary bits simultaneously, allowing them to handle larger data sets at astonishing speeds. Despite this advantage, quantum computers are still larger, costlier, and tend to have higher error rates, which limits their application in many areas, including AI.

In the coming years, quantum computing companies are working towards miniaturizing their chips, lowering error rates, and reducing production costs. They are also increasingly offering their quantum resources as cloud services. These advancements could enhance their application in various AI-related scenarios.

Two companies that may thrive under this trend are IonQ (IONQ) and Rigetti Computing (RGTI). We will assess which of these pioneering companies presents a more compelling investment opportunity.

Comparison of IonQ and Rigetti

IonQ offers three main types of quantum computing systems: its flagship Aria system, the commercially focused Forte system, and the Forte Enterprise for on-premise needs. Their primary clientele consists of significant government organizations and academic institutions. They are also working on a "trapped ion" technology that could potentially reduce the size of a quantum processing unit (QPU) from several feet to a few inches. This miniaturization could lead to the creation of more affordable and efficient quantum systems in the future.

Although IonQ faced challenges after the unexpected resignation of its co-founder and chief scientist Chris Monroe, who was instrumental in developing the trapped ion technology, the company has continued to grow. They have installed additional systems, signed new contracts with government entities, and established partnerships focused on AI.

On the other hand, Rigetti designs and manufactures its own QPUs and provides a platform called Forest that allows developers to create custom quantum algorithms. This full-stack approach positions Rigetti to offer a complete quantum computing framework.

Similar to IonQ, Rigetti is committed to creating more affordable and scalable QPUs for commercial use. Although there was concern when Chad Rigetti, the founder of the company, resigned from his roles in December 2022, the company quickly quelled these concerns by launching two significant products. In December, Rigetti introduced its Novera QPU, a 9-qubit quantum computer priced at $900,000. Demand from government and research clients has been robust for this new system. They also released their Ankaa-3 system, which features 84 qubits and boasts over 99% processing error detection, with plans for a more robust 100-qubit system later this year.

Future Prospects of IonQ and Rigetti

Both IonQ and Rigetti went public via mergers with special purpose acquisition companies (SPAC) but encountered difficulties achieving their optimistic pre-merger revenue projections. IonQ reported revenues of $22 million in 2023, falling short of a $34 million goal. Rigetti generated just $12 million in the same period, also missing its initial target of $34 million.

Despite these setbacks, both companies saw their stock prices reach record highs in December 2024 as investors responded positively to recent developments. Between 2023 and 2026, analysts predict IonQ will see a compound annual growth rate (CAGR) of 89%, with revenues reaching $148 million. In contrast, Rigetti is expected to see a CAGR of 43%, bringing its revenue up to $35 million.

It is important to note that both companies are anticipated to remain unprofitable for some time. Additionally, both firms may continue to dilute their shares to secure funding and cover stock-based compensation. IonQ's share count has grown by 10% since the SPAC merger, whereas Rigetti has seen a notable increase of 69% in shares since its arrival on the market.

Valuation-wise, both stocks are navigating a high price tag. IonQ, valued at $8.8 billion, trades at 59 times its anticipated sales figure for 2026. Rigetti, with a value of $4.3 billion, is even pricier at 123 times its projected sales for the same period.

Which is the Better Investment: IonQ or Rigetti?

According to forecasting data, the quantum computing market is projected to expand at a compound annual growth rate (CAGR) of 34.8% between 2024 and 2032, driven by smaller chips and improved error detection capabilities. While both IonQ and Rigetti stand to gain from this overall growth trend, investors should remain cautious about their inflated valuations. In light of IonQ's greater market presence, stronger growth projections, lesser dilution of shares, and comparatively lower valuation, it currently appears to be a more favorable investment option compared to Rigetti.

stocks, quantum, technology