Rigetti or D-Wave: Which Pure-Play Quantum Stock Is a Buy?

Quantum computing is set to revolutionize the tech industry due to its advantages over traditional computing. In this context, two companies focused solely on quantum computing, Rigetti Computing, Inc. RGTI, and D-Wave Quantum Inc. QBTS, have experienced increasing share value, prompting investors to consider which stock offers a more favorable investment opportunity. Let us examine –  

Reasons to Be Bullish on RGTI Stock 

In April, Rigetti obtained financial support from the Air Force Office of Scientific Research to enhance the production method of quantum computing chips. This financial support has enabled Rigetti to build error-resistant machines and expand its operations.  

Earlier in the year, Rigetti introduced the Ankaa-3 system, which has 84 qubits. The Ankaa-3 system represents a crucial achievement that has the potential to transform artificial intelligence (AI). This revolutionary system is expected to reverse Rigetti’s declining revenue trend and help the company build a sustainable long-term business.  

Rigetti’s revenues amounted to $1.5 million in the first quarter, representing a decline of 52% compared to the same period last year, primarily as a result of the expiration of certain government contracts. Worse still, its revenues of $10.8 million in 2024 represented a 10% decline from the previous year.  

Nonetheless, Rigetti possesses a minimal amount of debt and has accumulated $575 million in cash as of June. Its recent equity offerings also generated $350 million. All of this will assist the company in covering its operational expenses at this time. 

Reasons to Be Bullish on QBTS Stock 

Unlike Rigetti, D-Wave Quantum reported revenues of $15 million in the first quarter, a remarkable 509% increase year over year. The growth was driven by the delivery of its first “Advantage” quantum computer system to the Jülich Supercomputing Centre in Germany. This system is expected to enable breakthroughs in quantum applications and AI.  

D-Wave Quantum’s cloud-based quantum computing services, offered through a model known as quantum computing as a service (QCaaS), are also benefiting the company. In the first quarter, D-Wave Quantum acquired 133 customers, up from 128 last year. Notable clients include Lockheed Martin Corporation LMT and Mastercard Incorporated MA.  

D-Wave Quantum’s cash balance of $815 million in July significantly exceeds its total liabilities of $118.2 million from the first quarter. The company also raised $400 million through an equity offering in June. With substantial cash reserves, D-Wave Quantum is well-positioned to pursue acquisitions that could drive revenue growth. Additionally, the recent launch of a toolkit for AI model developers is expected to boost revenue further. 

RGTI or QBTS: Which Quantum Stock Is Worth Buying Now? 

Given Rigetti’s declining revenues, D-Wave Quantum appears to be a better choice. However, Rigetti’s Ankaa-3 system, which is a gate-based superconducting architecture, is adaptable and well-suited for AI applications, and should help the company increase its revenues soon. This should encourage stakeholders to continue investing in RGTI stock. 

Meanwhile, D-Wave Quantum’s rising revenues, strong cash reserves, and its pioneering role in quantum annealing give the company the potential to generate substantial future revenues and motivate shareholders to hold onto their QBTS stock. 

However, new investors should exercise caution before investing in Rigetti and D-Wave Quantum. Both companies reported operating losses in the first quarter, and quantum computing is still in development. These stocks face stiff competition from larger tech firms and may also become takeover targets. 

Therefore, investing in these pure-play quantum computing stocks involves considerable risk. Risk-averse investors should avoid them for now or wait until the second quarter results before making a decision. For now, both Rigetti and D-Wave Quantum possess a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.


 

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This article originally published on Zacks Investment Research (zacks.com).

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