Quantum computing stocks have been on a tear for much of the past year, driven by a series of technological breakthroughs that have captured investor attention. One of the most significant came in December 2024, when Alphabet revealed that its Willow chip completed a complex computation in minutes, an operation the company said would have taken a supercomputer 10 septillion years.
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More recently, investor optimism received another boost as J.P. Morgan announced plans to allocate $1.5 trillion to sectors deemed vital to U.S. national security, including quantum computing.
While it hasn’t been a linear journey throughout, the trend has certainly been a positive one for investors in those companies leading the quantum charge. Indeed, many view the technology as a total gamechanger, drawing comparisons with the sizzling AI revolution.
Investments in quantum are not without peril, however, as these companies remain firmly in the R&D stages and have yet to generate profits. Some tech leaders have openly questioned whether quantum will truly have any practical applications in the near term.
Still, the flashing dollar signs are a strong incentive for many – one McKinsey report even projected that the quantum computing industry could grow to $72 billion in 2035.
Against this backdrop, one investor, known by the pseudonym Hunting Alpha, took a closer look at two of the most talked-about names in the space – IonQ (NYSE:IONQ) and Rigetti Computing (NASDAQ:RGTI). The investor ultimately decided one offered enough promise to warrant a position, while the other didn’t make the cut. Let’s take a closer look.
IonQ
IONQ and its trapped-ion technology have drawn sustained attention over the past year, propelled by a steady cadence of breakthroughs and strategic developments that signal accelerating progress across the company’s roadmap.
Earlier this week, the company announced that its fifth-generation quantum system, IonQ Temp, achieved its AQ #64 benchmark three months ahead of schedule, and according to IONQ, the system now reaches a computational space that is 36 quadrillion times larger than IBM’s publicly available quantum computers.
The company also finalized the acquisition of Vector Atomic earlier this month, adding sophisticated quantum sensing expertise in positioning, navigation, and timing systems, a move that further broadens its technological edge.
Meanwhile, the company has been progressing with some high-visibility partnerships, including a recent Memorandum of Understanding with the U.S. Department of Energy, aimed at advancing quantum solutions for space innovation and cybersecurity.
Investors have certainly taken notice, as IONQ’s share price has soared by 403% over the past 12 months.
Hunting Alpha, who previously held a bearish stance, now admits to a change of heart. “I have succumbed to the FOMO and have bought a small position in IONQ,” the investor said.
The investor believes that the company’s growth is being powered by acquisitions, including Vector Atomic, that are “reasonably priced.” The investor notes that the annual revenues of recent acquisitions are north of $100 million, while the median EV/Revenue multiple of 45.1x compares nicely with the EV/revenue multiple of niche quantum stocks.
Additionally, the appointment of CFO Inder Singh, who brings a robust M&A background from his tenure at Cisco, adds further confidence in IONQ’s ability to execute strategically sound deals.
While the high costs of M&A are driving growing EBITDA losses, Hunting Alpha also notes that a July equity raise of $1 billion gives IONQ plenty of cash on hand.
The investor is also heartened to see a strong list of customers and partners, including Nvidia, Google Cloud, and Microsoft Azure. “Many marquee names are customers and partners of the company,” emphasizes Hunting Alpha.
Though not quite ready to go all in, Hunting Alpha thinks the company “is worth a cautious FOMO bet,” and is therefore giving IONQ a Buy rating. (To watch Hunting Alpha’s track record, click here)
The Street’s stance on IONQ presents an interesting contradiction. On one hand, the stock carries a Moderate Buy consensus rating, supported by 6 Buy recommendations and 3 Holds. On the other hand, the average 12-month price target sits at $61.63, implying a modest ~2% downside from current levels – suggesting that the recent bull run has pushed the stock further than most analysts had anticipated. (See IONQ stock forecast)
Rigetti Computing
Rigetti Computing has arguably been one of the biggest beneficiaries of the rising quantum wave, and its share price has soared by a seemingly absurd 4,777% during the trailing twelve months.
RGTI has benefited from a series of tangible growth catalysts in recent months, including the sale of two 9-qubit quantum computing systems for $5.7 million, with deliveries scheduled for the first half of the coming year. In addition, the company recently secured a three-year contract worth $5.8 million from the Air Force Research Laboratory (AFRL) to advance superconducting quantum networking in collaboration with Dutch startup QphoX.
At the same time, the company has backed up its market momentum with technological progress. It recently announced that its modular 36-qubit system achieved a median two-qubit gate fidelity of 99.5%, representing a two-fold reduction in error rate compared to its prior 84-qubit Ankaa-3 system. This system is built by tiling together four 9-qubit “chiplets,” leveraging the company’s proprietary modular chip technology, and is scheduled for launch on August 15, 2025.
Importantly, the company remains on track to scale this architecture to a 100+-qubit chiplet-based system by the end of 2025, while maintaining the same high fidelity target of 99.5%.
So with all this momentum, is it still worth jumping into RGTI now? Hunting Alpha admits the performance is hard to ignore, but despite the tempting gains, the investor isn’t ready to become a “happy bull” just yet.
“I cannot bring myself to act on that impulse, as my rational mind struggles to see a single good reason for bullish fundamental growth prospects,” details the investor.
Their skepticism starts with the numbers. Despite high-profile partnerships and system sales, Rigetti has yet to demonstrate “meaningful” revenue growth. Even CEO Subodh Kulkarni has cautioned that it is still too early for the company to be talking seriously about “sales and sales growth,” which hardly inspires confidence in near-term profitability.
And while recent system sales are encouraging, Hunting Alpha worries they may be isolated orders rather than the beginning of recurring demand. The investor also flags concerns over future dilution, arguing that the current valuation implies a future equity value of $3.553 billion, far above current levels of $553 million.
“I deduce that for the current valuations to make sense, the market is pricing in another ~6x multiplier growth on RGTI’s equity balance, likely via future equity infusions,” Hunting Alpha sums up.
Hunting Alpha is therefore prepared to sit this one out, assigning RGTI shares a Hold (i.e., Neutral) rating.
Wall Street’s stance is similarly conflicted. On the surface, analysts are bullish – 6 rate RGTI stock a Buy and one a Hold, resulting in a Strong Buy consensus. Yet, those same analysts assign an average price target of just $28.10, implying a 39% drop from current levels. It will be interesting to see whether those targets are revised, or if the stock comes back down to meet them. (See RGTI stock forecast)
With the facts laid out, it’s clear that the investor has chosen IONQ as the superior quantum computing stock to buy right now.
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.