The quantum computing industry has emerged as one of 2024's hottest investing themes, with leading players seeing their stocks surge amid growing commercial and government interest. Industry research firm Fortune Business Insights projects the global quantum computing market will grow from $1.16 billion in 2024 to $12.6 billion by 2032, representing a 34.8% annual growth rate.
Two prominent, pure play quantum computing companies, IonQ (NYSE:IONQ) and Rigetti Computing (NASDAQ:RGTI), offer investors different approaches to this revolutionary technology. While both stocks have delivered impressive gains in 2024, their business models, technological approaches, and current market positions show notable differences. Here's how these quantum computing contenders stack up for investors.
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Revenue momentum and scale
IonQ has demonstrated stronger commercial traction, with third-quarter 2024 revenue reaching $12.4 million, representing 102% year-over-year growth. The company secured $63.5 million in new bookings, including a landmark $54.5 million contract with the U.S. Air Force Research Lab to develop networked quantum systems.
Rigetti reported a more modest Q3 2024 revenue of $2.4 million. However, the company maintains strong research partnerships, including a prominent position at the U.K.'s National Quantum Computing Centre, where its 24-qubit system supports advanced quantum research and development.
Technological approaches
IonQ employs trapped ion quantum computing technology, which offers high stability and connectivity between qubits. The company's systems have demonstrated strong performance metrics and reliability in cloud-based quantum computing services.
Rigetti focuses on superconducting qubit technology, achieving gate speeds 10,000 times faster than trapped ion systems. The company manufactures its chips in-house at Fab-1, the industry's first dedicated quantum-device manufacturing facility, providing greater control over its technology development.
Strategic partnerships and development
IonQ announced several strategic moves in 2024's Q3, including plans to acquire quantum networking company Qubitekk. The company also formed partnerships with AstraZeneca for drug-discovery applications and Ansys to integrate quantum computing with the $10 billion computer-aided engineering industry.
Rigetti has concentrated on advancing its core technology, planning to introduce a new modular system architecture in 2025. The company expects to achieve 99.5% median two-qubit fidelity in its upcoming 36-qubit system, followed by a 100-plus qubit system by year-end 2025, showcasing its focus on scalable quantum processing units.
Financial position and valuation
IonQ maintains a stronger cash position, with $382.8 million in cash and investments as of Sept. 30, 2024. However, the company's Q3 net loss reached $52.5 million, reflecting continued heavy investment in research and development. With a $8.2 billion market capitalization, IonQ trades at a staggering 212.6 times trailing sales.
Rigetti reported $92.6 million in cash and investments at quarter-end, with a narrower Q3 net loss of $14.8 million. While its $1.22 billion market capitalization appears more modest, the company still trades at 60 times trailing sales, highlighting the premium valuations in the quantum computing sector.
Which quantum computing stock is the better buy?
Both companies have attracted significant institutional investment in 2024, with firms like Vanguard and BlackRock increasing their positions in each quantum computing stock in the second half of the year. IonQ offers stronger commercial momentum and a more robust balance sheet, while Rigetti's manufacturing capabilities and technology roadmap present unique competitive advantages.
For investors seeking quantum computing exposure, IonQ's revenue growth and government contracts provide more near-term visibility despite its higher valuation. Rigetti, on the other hand, offers a more speculative opportunity focused on superconducting technology advancement.
However, with both stocks trading at steep premiums and quantum computing still in the early stages, investors should size positions accordingly within a diversified portfolio.
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George Budwell has positions in BlackRock and IonQ. The Motley Fool recommends Ansys and AstraZeneca Plc. The Motley Fool has a disclosure policy.
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