Quantum computing is closer to reality than most investors realize. Although it may be a few years away, the contracts and relationships made now will affect the way the industry grows.
And for investors to get the upper hand in the quantum computing investment space, they need to wait today before all of the early benefits, which are usually at the top, are gone.
Two of the most popular quantum computing stocks are Abandon Computing (RGTI 2.96%) and D-Wave Quantum (QBTS 6.62%). Both companies are vying for market share, but which is the best buy right now? Let’s take a look.
Image source: Getty Images.
Each takes a different approach to quantum computing
There is no formal method or method for quantum computing. While the general idea is to use quantum mechanics to act as a processor, how each company manages the particles is completely different.
The most common method is known as superconducting, which is done by cooling particles to near zero so that their quantum motion is slow enough to be used for computing. This technology is used by many legacy technology companies, including Rigetti Computing.
Modern Change
(-2.96%) $-0.40
Current Price
$12.93
Important Information Points
Market Cap
$4.3B
Location of the Sun
$12.53 – $13.57
52wk Range
$6.86 – $58.15
Volume
680K
Avg Vol
30M
Gross Margin
-8613.15%
D-Wave Quantum does not use superconducting; instead, it uses a completely different technology: quantum annealing. This technology works specifically to search for many solutions at the same time, looking for the lowest level of energy in the system to find the right answer.
Quantum annealing has many applications, including artificial intelligence (AI) training and learning, climate modeling, and control networks, but it cannot adapt to general-purpose computing conditions such as superconducting products.
This makes Rigetti’s market potential huge, so I’ll give it a win in this category.
Source: Rigetti Computing
D-Wave’s finances look healthy
When you turn to financials, it is difficult to evaluate each company. Right now, the only money they each generate comes from research contracts or pre-order sales.
None of these can sustain companies forever. However, the market and its customers are willing to finance these companies because they believe that there is something in quantum computing, even if it will be several years before we see this technology become more common.
Modern Change
(-6.62%) $-0.92
Current Price
$12.98
Important Information Points
Market Cap
$4.8B
Location of the Sun
$12.75 – $13.89
52wk Range
$5.77 – $46.75
Volume
76K
Avg Vol
29M
Gross Margin
82.59%
D-Wave is clearly in a better place and has announced several early system sales, including a $20 million system to Florida Atlantic University and a 10 million euro ($11.5 million) investment in Italy. Rigetti system sales in the fourth quarter were $8.4 million to an Indian customer.
From the chart, you can see that Rigetti’s business is moving in the wrong direction, while D-Wave is moving forward.
RGTI Revenue Data (TTM) by YCharts; TTM = 12-month follow-up.
I think this tells you all you need to know about the financial side of things, and the D-Wave Quantum gets the nod here.
Source: D-Wave Quantum
Rigetti failed to establish meaningful relationships
The last category I want to look at is sustainable partnerships. These companies must establish relationships with customers long before the technology is available, so that they can provide significant growth once the technology is ready for commercial use.
Rigetti has several research partnerships, but he lost one of the most important contracts of all: the Defense Advanced Research Projects Agency (DARPA) contract. The DARPA contract puts whichever company wins it on the fast track to becoming a contributor to the US defense agencies, which would be a huge win.
Rigetti started the trial but was eliminated in the first round. This is a huge red flag for me because it showed Rigetti’s technology behind its peers.
D-Wave Quantum did not submit this contract request because its development technology is not suitable for the task that DARPA wants. However, it has already partnered with several companies in the manufacturing sector to provide initial success, such as scheduling. I’m pretty confident that D-Wave already has the partnerships it needs to succeed, giving it the ultimate win in this review.
Source: D-Wave Quantum
Although the final score is 2-to-1 in favor of the D-Wave Quantum, I think it’s a runaway winner. Its only problem is that it does not pursue a comprehensive approach; instead, it chooses to choose itself. I think it’s actually a smart strategy for quantum computing, which makes it a better stock to buy now.
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