Why IBM's Quantum Strategy Beats Rigetti's for Risk-Conscious Investors

The Quantum Computing Contradiction

Rigetti Computing has grabbed headlines with impressive technical achievements in 2025. The company demonstrated the industry’s largest multichip quantum system, rolled out a 100±qubit chiplet with 99.5% accuracy, and secured $5.7 million in equipment orders plus a $5.8 million Air Force Research Laboratory contract. By 2026, it plans a 150±qubit system with 99.7% fidelity, escalating to 1,000+ qubits by 2027.

Yet beneath these milestones lies a troubling reality: quantum computing remains extremely error-prone at these accuracy levels. Industry data scientists don’t recommend implementing additional error-correction until hardware achieves 99.9% fidelity—a threshold Rigetti hasn’t reached. The company’s superconducting qubits operate 10,000 times faster than competitor IonQ, but speed without reliability creates a fundamental risk-reward problem.

Moreover, Rigetti faced a setback when it wasn’t selected among the initial 11 companies advancing in the U.S. Defense Advanced Research Projects Agency’s Quantum Benchmarking Initiative—a program designed to identify which firms can build fault-tolerant quantum systems within a decade.

The Cash Burn Problem

What makes Rigetti particularly risky isn’t just the technology gap. The company generates minimal revenue while operating at a significant cash burn rate. This creates a precarious position: the hardware remains too error-prone for commercial applications, yet the runway to reach commercially viable systems keeps shrinking.

Rigetti’s superconducting qubit advantage provides speed, but not stability. In quantum computing, speed without fault tolerance is a feature without a function.

IBM’s Dual-Front Assault on Quantum

IBM presents a fundamentally different risk profile. Once a legacy hardware company, IBM has systematically transformed itself into a quantum-focused player. It divested its low-margin IT infrastructure services (spinning off Kyndryl in 2021) and refuses to treat quantum as a side project—unlike diversified tech giants such as Alphabet or Microsoft.

IBM’s breakthrough approach involves two parallel chip architectures:

Nighthawk (The Practical Path): This 120-qubit chip prioritizes quality over scale. IBM redesigned its connection topology specifically to enhance inter-qubit communication, targeting quantum advantage—the ability to solve real-world problems faster than classical supercomputers. Nighthawk can currently handle problems requiring up to 5,000 two-qubit gates, the computational threshold that exceeds classical supercomputers. The roadmap targets 10,000 gates by 2027. IBM plans to integrate Nighthawk with IBM Cloud for advanced simulations starting in the near term.

Loon (The Long-Term Vision): This experimental chip resets qubits mid-calculation without interrupting operations—a crucial capability for building error-free quantum systems. IBM envisions Loon as the core component of Starling, the world’s first large-scale, error-corrected quantum computer, projected for 2029.

The Software Moat Advantage

IBM also recognized what Nvidia proved with CUDA: software platforms create sustainable competitive advantages. IBM developed Qiskit, an open-source quantum research platform optimized for IBM hardware. While Qiskit remains open (unlike Nvidia’s proprietary CUDA), its integration with IBM systems creates lock-in effects that benefit IBM’s long-term market position.

The Cash Flow Reality Check

IBM’s core business continues generating robust revenue and substantial operating cash flow. This financial strength allows IBM to fund quantum research at scale without existential pressure—a stark contrast to Rigetti’s burn rate.

For investors assessing the quantum computing sector, IBM offers proven financial stability backing its quantum ambitions, while Rigetti’s speculative technology faces mounting pressure to reach commercialization before capital constraints force difficult choices. The risk-reward calculus strongly favors the company with both better technology trajectory and financial staying power.