Pure-play quantum computing stocks received a strong boost on May 21 after the U.S. Department of Commerce announced letters of intent totaling approximately $2.013 billion in proposed CHIPS and Science Act incentives for nine quantum-related companies, including seven quantum-computing developers.
Among the pure-play quantum companies selected, D-Wave Quantum QBTS and Rigetti Computing RGTI each received up to $100 million in proposed federal funding. The announcement triggered a sharp rally across quantum stocks and has reignited investor interest in the sector. Following the announcement, shares of QBTS and RGTI surged 14.6% and 22.6%, respectively, compared with the S&P 500’s 1% gain.
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The key question now is, which stock offers the better opportunity following this landmark government endorsement? Let’s find out.
QBTS: Federal Support to Expand Market Reach
D-Wave received a Letter of Intent from the U.S. Department of Commerce for $100 million in proposed CHIPS and Science Act funding, making it one of only seven quantum-computing companies selected for federal support. The funding supports D-Wave's strategy of combining its established annealing systems with emerging gate-model quantum capabilities.
What differentiates D-Wave from many quantum peers is its focus on commercial deployment today. The company recently secured a $10 million, two-year quantum-computing-as-a-service agreement with a Fortune 100 customer.
D-Wave's annealing systems are already being used to tackle complex optimization challenges across logistics, manufacturing, scheduling and supply-chain management. This can lead to a clearer path to near-term revenue generation than many of its competitors that are focused primarily on long-term research milestones.
RGTI: Another Key Beneficiary of America's Quantum Push
Rigetti also received a Letter of Intent for up to $100 million in proposed CHIPS and Science Act funding to accelerate R&D aimed at addressing key technical challenges in scaling and advancing superconducting quantum computers. The funding could help the company advance its next-generation quantum architectures and move closer to utility-scale quantum computing.
Unlike D-Wave's focus on optimization applications that are generating commercial demand today, Rigetti is targeting the larger long-term opportunity in gate-model quantum computing. Its goal is to build scalable, fault-tolerant quantum systems capable of solving complex problems beyond the reach of classical computers.
The company has shown signs of progress. First-quarter revenues nearly tripled year over year to $4.4 million, while its 108-qubit Cepheus system became available through major cloud platforms. Rigetti has also prioritized improvements in gate fidelity and overall system performance rather than simply increasing qubit counts.
Which Stock Has the Stronger Investment Case?
Both companies emerged as clear winners from the U.S. government's $2 billion quantum initiative.
Yet D-Wave currently appears to have the edge. Its combination of growing commercial traction, multiple technology pathways and direct exposure to near-term enterprise applications gives it a stronger bridge between today's revenues and tomorrow's quantum opportunity. The recent CHIPS Act funding only strengthens that position.
Based on short-term price targets offered by 13 analysts, QBTS’ average price target represents an increase of 32.39% from the last closing price.
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For Rigetti, the federal funding could help accelerate its roadmap by supporting R&D efforts that would otherwise require substantial shareholder-funded capital. However, Rigetti remains more dependent on future technological breakthroughs than D-Wave. The commercial adoption of superconducting gate-model systems at scale remains a longer-duration opportunity.
Based on short-term price targets offered by 10 analysts, RGTI’s average price target represents an increase of 25.91% from the last closing price.
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Stretched Valuations Temper the Upside for Both
In terms of the forward 12-month price/sales (P/S), QBTS is trading at 178.18X, higher than its one-year median of 171.20X and the Zacks Computer and Technology sector’s 6.81X.
RGTI remains relatively expensive, trading at 248.0X forward 12-month P/S but lower than its one-year median of 259.72X.
Price/Sales Ratio (Forward 12 Months): QBTS, RGTI
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D-Wave and Rigetti both currently hold a Value Score of F.
Our Take
Both D-Wave and Rigetti stand to benefit from the U.S. government's quantum-computing push, but D-Wave appears better positioned in the near term. The company combines federal support with growing commercial adoption, a clearer path to revenue generation and higher implied upside based on analyst targets. Rigetti's long-term potential remains compelling, but its success is more dependent on future technological breakthroughs. With a Zacks Rank #3 (Hold) for QBTS versus a Zacks Rank #4 (Sell) for RGTI, investors may consider holding QBTS while avoiding or reducing exposure to RGTI at current levels.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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This article originally published on Zacks Investment Research (zacks.com).