Better Artificial Intelligence Stock: Rigetti Computing vs. Nvidia

As a tech enthusiast, I’ve been thrilled to witness the explosive growth of the artificial intelligence (AI) market over the past few years. It’s all thanks to revolutionary generative AI platforms like OpenAI’s ChatGPT, which have completely transformed the way businesses handle data, automate tasks, and interact with their customers. In this AI gold rush, it’s safe to say that Nvidia (NVDA), the global leader in GPU production, has reaped the most rewards. Their technology is instrumental in handling those intricate AI tasks, making them the undisputed kings of this exciting era!

As a tech enthusiast, I’d say, “Unlike me focusing on one task at a time like most CPUs do, GPUs can juggle multiple numerical tasks all at once – whether they’re integers or floating point numbers. This parallel processing makes high-end GPUs invaluable tools for the AI gold rush, outperforming single CPU solutions.

However, as the data center GPU market for high-growth applications gradually reaches maturity, some investors are increasingly exploring quantum computers as the potential next leap in technology for AI tasks. Unlike conventional CPUs and GPUs that rely on binary logic to separately store zeros and ones, quantum processing units (QPUs) can concurrently store these values in qubits.

Maintaining the data in a quantum state enables Quantum Processing Units (QPUs) to handle significantly larger amounts of information at an extraordinarily swift pace compared to Central Processing Units (CPUs) or Graphics Processing Units (GPUs). Yet, QPUs are also larger, costlier, and consume more energy than GPUs. As a result, their application remains predominantly in specialized research fields rather than mainstream computing tasks.

The soaring anticipation surrounding quantum computers, particularly for artificial intelligence, has ignited a spark in many leading stocks within the burgeoning market. One such stock was Rigetti Computing (RGTI), a company specializing in the development of quantum chips, hardware systems, and cloud-based solutions.

Over the last year, it’s been quite astounding to witness Rigetti’s stock soaring an impressive 1,460%. Conversely, Nvidia’s stock has managed a more modest increase of less than 50%. The question now is: Can Rigetti keep up this remarkable pace and continue to outperform Nvidia in the near future?

Rigetti’s valuations are getting overheated

As a quantum computing enthusiast, I’m thrilled to share that Rigetti offers both modular and non-modular Quantum Processing Units (QPUs). The unique aspect of their modular chips is that they can be seamlessly connected, expanding the computational power (qubits) of a quantum system. Furthermore, they design and manufacture their own quantum systems and offer a cloud-based platform for creating quantum applications. This versatility positions them as a comprehensive solution provider in the realm of quantum computing.

More recently, Rigetti unveiled a 9-qubit Quantum Processing Unit (QPU) available for commercial users, while offering the 84-qubit Ankaa 3 quantum system to its government and research clientele. In the current year, they are set to debut a modular system linking four of their 9-qubit systems, resulting in a 36-qubit configuration. For the following year, they plan to introduce a non-modular 100-qubit QPU. Additionally, they are collaborating with Nvidia to create hybrid QPU and GPU systems, aimed at streamlining AI tasks.

Rigetti’s quantum systems aren’t as potent as the top-tier Eagle quantum systems from IBM, boasting over 127 qubits of computational capacity. Nonetheless, Rigetti provides greater flexibility in on-site deployments and pricing arrangements compared to IBM. Additionally, Rigetti is a compelling choice for customers who prefer not to be tied to IBM’s cloud infrastructure.

Between the years 2024 and 2027, experts predict that Rigetti’s revenue will surge at a Compound Annual Growth Rate (CAGR) of approximately 52%, increasing from $10.8 million to $37.7 million. This projected growth path is remarkable, but it’s anticipated that the company will remain unprofitable for an extended period ahead.

With a market capitalization of $5 billion, Rigetti’s stock value is currently 133 times the projected sales for 2027. This extremely high valuation implies that an excessive amount of growth may have already been factored into its current share price.

Nvidia still looks reasonably valued

Nvidia primarily earns its income and experiences growth through the sale of data center graphics processing units (GPUs). The company dominates over 90% of the market for these data center GPUs, keeping customers tied to their products by means of CUDA – a platform designed for parallel computing that’s useful in developing AI applications. Furthermore, Nvidia maintains a significant lead over its competitors when it comes to raw computational power.

Between fiscal years 2025 (which concluded this January) and 2028, analysts forecast that Nvidia’s revenue and Earnings Per Share (EPS) will increase annually at a compound average growth rate (CAGR) of approximately 31% and 29%, respectively. This projected growth can be attributed to the expansion of the Artificial Intelligence (AI) market, the launch of its next-generation Blackwell GPUs that are about 2.5 times faster than its Hopper GPUs, and reduced limitations on the sale of lower-end data center GPUs in China.

As an observer, I find myself marveling at Nvidia, whose market capitalization has surpassed a staggering $4.2 trillion, making it the undisputed leader in global corporate value. At first glance, one might consider this valuation steep, given that it amounts to 21 times this year’s projected sales. However, upon closer examination, it becomes clear that Nvidia is trading at a relatively modest 42 times its earnings for the same period. Considering its exceptional growth prospects, this multiple appears surprisingly reasonable.

Competing with AMD’s more affordable data center GPUs poses a challenge for Nvidia, but their initial advantage, superior standing in the industry, and the strong attachment of developers to CUDA could keep them ahead. These advantages are likely to help Nvidia remain dominant in the AI market for the near future.

The better buy: Nvidia

Rigetti has significant growth possibilities, yet it’s currently being traded at levels similar to meme stocks. If you’re seeking a straightforward method to capitalize on the artificial intelligence (AI) surge, it might be wiser to stick with Nvidia. While Rigetti’s Quantum Processing Units (QPUs) could potentially yield benefits in AI applications, this is a speculative scenario that may not justify its current market value at this time.

2025-07-23 11:35

Rigetti’s valuations are getting overheated

Nvidia still looks reasonably valued

The better buy: Nvidia

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