There's a lot of buzz in the quantum computing investment realm, mainly driven by investors' willingness to take on more risk. As a result, people are also considering investing in high-risk, high-reward quantum computing pure plays like D-Wave Quantum (QBTS -1.59%) and Rigetti Computing (RGTI -3.32%).
These are two of the more popular pure-play quantum computing stock picks, but is one a better pick than the other?
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Quantum computing is still proving its relevance
Quantum computing could be a game-changing technology, similar to how artificial intelligence (AI) has been. Traditional computing is fantastic for straightforward computations with a clear input and output. However, it can struggle when there are multiple possible solutions. Traditional computing can brute-force its way through these calculations, but it's very intensive. Quantum computing is an alternative to these problems, which appear in use cases such as drug discovery, logistics networks, and weather forecasting.
While quantum computing is still in its infancy, it's developing rapidly. Each month, quantum computing firms announce new records for accuracy, which is a major problem with quantum computing currently. In July, Rigetti Computing announced that its Ankaa-3 system with four 9-qubit chips achieved a 99.5% two-qubit gate fidelity, a measure of how accurate a calculation is through two processing gates. While that's impressive, it's nowhere near where it needs to be to become commercially viable.
Most quantum computing companies point toward 2030 as the key year for quantum computing becoming a widely used technology, and both D-Wave and Rigetti are racing toward that goal. But they're getting there via two different paths.
Each company is taking a different approach toward quantum computing
There are a few ways to perform quantum computing. Rigetti Computing is taking the superconducting approach, while D-Wave Quantum is taking the annealing path. Each of these techniques has benefits and drawbacks, and it's impossible to know which technique will be the ultimate winner. There could even be multiple winners, depending on the end use.
However, I think the biggest factor is which companies are using the same technique as these two.
D-Wave Quantum uses the quantum annealing approach, which involves solving optimization problems. It looks for the lowest energy state in the solution, which is the optimal answer. This technique isn't common, and sets D-Wave apart from the competition. This approach solves a wide range of quantum computing problems and could be easier to scale, giving it some advantages over Rigetti's approach.
Rigetti Computing is taking the superconducting path, which is the most popular route. This involves cooling a particle down to near absolute zero, which is quite expensive. The superconducting approach allows for a ton of flexibility, as it is designed to run any quantum computing workloads, making it flexible but also lacking focus in one area. Because it's the most popular, Rigetti is competing against massive tech companies like Alphabet and IBM, which have far more resources than Rigetti Computing has access to.
As a result, Rigetti may be outspent by its competition, even if its products are solid. Because of D-Wave's unique approach, it could carve out a niche for itself in the quantum computing realm, which makes it a better investment pick in my eyes.
Both companies are incredibly risky, and investors must keep that in mind moving forward. However, as long as position sizing is kept appropriate, buying one of these two quantum computing plays can be a great way to introduce some massive upside for your portfolio.
