TLDR
- Rigetti Computing (RGTI) shares surged from under $1 in September to a high of $21.42 in January before falling to around $8.95
- Rigetti secured a $35 million investment and $100 million partnership with Quanta Computer for quantum computer development
- Palantir (PLTR) stock increased 226% over the past year, driven by its successful AI Platform (AIP)
- Palantir reported 30% year-over-year sales growth to $2.9 billion in 2024 with net income more than doubling to $467.9 million
- Despite Rigetti’s quantum computing potential, Palantir appears to be the better investment due to strong financials and lower price-to-sales ratio
AI stocks have been cooling off as economic uncertainty rises due to President Trump’s tariff policies. This creates buying opportunities for long-term investors looking at companies like Palantir Technologies (PLTR) and Rigetti Computing (RGTI).
Palantir, with its AI-powered data platform, and Rigetti, focused on quantum computing, have both seen their share prices soar over the past year. But which offers better value?
Palantir’s stock price surged 226% through the week ended March 7. The remarkable growth stems from the success of its Artificial Intelligence Platform (AIP).
AIP enables organizations to build and deploy AI applications in just days instead of months. This rapid deployment capability has attracted numerous businesses and government clients.
The platform’s popularity drove Palantir’s 2024 sales up nearly 30% year over year to $2.9 billion. The company expects similar growth in 2025, forecasting revenue of at least $3.7 billion.
Palantir’s profitability improved dramatically
Not only did Palantir’s sales increase, but its profitability improved dramatically. Its annual net income of $467.9 million more than doubled the $217.4 million earned in 2023.
Palantir’s balance sheet is equally impressive. The company ended 2024 with $6.3 billion in total assets, including $2.1 billion in cash and equivalents. Its cash alone exceeds total liabilities of $1.2 billion.
Meanwhile, Rigetti Computing has experienced even more dramatic stock movement. Its shares traded below $1 in September before skyrocketing to $21.42 in January. The stock has since fallen to around $8.95.
Rigetti extended its winning streak for a second day on Wednesday, adding 11.18% to finish at $8.95. The company continues to benefit from investors seeking safer assets like AI stocks in a cautious economic environment.
The quantum computing company recently announced securing a $35 million investment and $100 million partnership agreement with Quanta for the development of quantum computers. Under the deal, Quanta purchased RGTI shares at $11.59 each.
Following this investment, the two companies will jointly invest $100 million over the next five years to develop quantum computing technology. This partnership aims to help Rigetti commercialize its quantum machines.
Rigetti expects to release a 36-qubit system based on four 9-qubit chips by mid-2025. By year-end, it plans to release a system with over 100 qubits with a targeted 2x reduction in error rates from current levels.
Rigetti’s 2024 financial results raise concerns
Despite this promising outlook, Rigetti’s 2024 financial results raise concerns. Revenue dropped to $5.7 million from $9.2 million in 2023. Meanwhile, expenses increased, with cost of revenue nearly doubling to $5.1 million.
These factors contributed to a net loss of $201 million in 2024, much worse than the $75.1 million loss in the prior year. Industry forecasts suggest it could be years or even decades before quantum computers are ready for mass adoption.
When comparing valuations, Rigetti’s price-to-sales ratio is much higher than Palantir’s, suggesting its shares are overvalued despite the recent price drop from January highs.
Palantir not without risk
Palantir’s stock is not without risk. Its beta value exceeds 2, indicating high price volatility. The shares are well off their 52-week high of $125.41 reached in February.
Both companies represent different approaches to AI investment. Rigetti focuses on quantum computing, which could eventually enable more powerful AI capabilities. Palantir offers an established AI platform already generating substantial revenue and profit.
After examining how both companies performed in 2024, Palantir emerges as the better AI stock for long-term investment based on current financial strength, proven market success, and more reasonable valuation.
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