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The quantum computing sector was shaken after Martin Shkreli, a well-known but controversial figure, took aim at two big names in the industry. On Jan. 21, 2025, Shkreli labeled his bet against IonQ (IONQ) and Rigetti Computing (RGTI) as “one of the best shorts” of his career.
Shkreli’s criticism focuses on operational issues, pointing to an Amazon Web Services Braket dashboard showing all three of IonQ’s quantum devices and both of Rigetti’s systems offline or with errors. This raises questions about whether the hype around these companies matches their current technological capabilities.
Industry leaders like Nvidia’s (NVDA) Jensen Huang and Meta’s (META) Mark Zuckerberg have also said practical quantum computing might still be 15 to 20 years away.
Even so, the long-term outlook for the sector looks bright. Microsoft (MSFT) is urging businesses to prepare for a “quantum-ready” future, adding fresh excitement to the market. McKinsey predicts that the quantum computing industry could grow to $2 trillion by 2035, suggesting today’s challenges may only be short-term hurdles.
This debate comes at a time when both companies have hit major milestones in stock performance. Let’s examine where these two quantum computing leaders stand amid all this controversy and whether you should buy or sell.
IonQ (IONQ)
IonQ (IONQ) produces quantum computers that big tech companies like Amazon (AMZN), Microsoft, and Google (GOOGL) offer to their customers through the cloud.
Even with Shkreli pointing fingers at its offline systems, IonQ stock has been impressive, jumping 235% in the past year.
The company is worth $8.3 billion, but some might worry about its high valuation as it trades at 219.3 times sales and 20.21 times book value.
IonQ did better than expected in the third quarter, bringing in $12.4 million, doubling its year-ago performance. The company signed new deals worth $63.5 million, pushing its yearly total to $72.8 million.
Looking ahead, the company expects to generate between $38.5 million and $42.5 million in revenue for all of 2024, with $7.1 million to $11.1 million in the fourth quarter.
The company has secured a meaningful $21.1 million project with the U.S. Air Force Research Lab to develop quantum networks and improve military capabilities. Plus, it has teamed up with Oak Ridge National Laboratory to create a breakthrough quantum computing method that could change how we approach quantum algorithms.
Wall Street seems cautiously optimistic about IonQ, with a “Moderate Buy” consensus. Analysts have an average price target of $30.40, below its current trading price.
Rigetti Computing (RGTI)
Rigetti Computing (RGTI) builds quantum computers and processors, offering them through cloud services that companies and researchers can access. Its main business comes from its Quantum Cloud Services platform, where customers can use quantum computing technology without needing to buy the hardware.
The stock has been on an incredible run, soaring 1,054% over the past year, although recent performance shows some volatility. RGTI stock is down 26% over the past month and 17.5% since the year started.
Rigetti just released something pretty exciting, its new Ankaa-3 system, which has 84 qubits (the building blocks of quantum computers) and works with 99.5% accuracy. Starting in early 2025, companies will be able to use this system through Amazon and Microsoft’s cloud platforms. The company is also doing clever things with AI, teaching its quantum computers to adjust themselves automatically, which shows how far the technology has come.
Rigetti brought in $2.4 million in the third quarter but spent $18.6 million on operations, creating a $14.8 million loss. The good news is that Rigetti has $92.6 million in cash and big plans ahead. The company is aiming to break the 100-qubit barrier by the end of the year.
Despite these high prices, the experts seem optimistic about Rigetti’s future, giving it a “Strong Buy” consensus rating. The average price target is $6.10, significantly below its current trading price.
The Bottom Line on Quantum Computing Stocks
While Shkreli’s concerns about offline quantum systems raise valid operational questions, both IonQ and Rigetti are making significant technological strides despite their current challenges. However, their sky-high valuations and the significant gap between current capabilities and market expectations suggest caution is warranted.
For investors considering these stocks, the long-term potential of quantum computing remains promising, but current prices may not reflect the technological reality. A “wait and see” approach might be prudent until operational stability improves, although most analysts maintain bullish ratings on both stocks.
