IBM Corp. NYSE: IBM it may be doubling down on quantum computing efforts, and putting smaller players like IonQ Inc. NYSE: IONQ and Rigetti Computing NASDAQ: RGTI in a difficult place. The US Department of Commerce recently got the tech giant to get $1 billion in federal funding to support a new foundation for quantum-grade superconducting wafers, while smaller competitors like Rigetti are likely to get a fraction of that money. Then, IBM announced at the beginning of June that it plans to spend 10 billion dollars of its capital on the development of quantum computing in the next five years.
These two developments highlight how much of an advantage a technology player like IBM has with much smaller pure-play quantum firms. While some of these dedicated quantum competitors aim to build savings—with varying degrees of success—the truth is that none of them may be in a position anytime soon to beat IBM in dollar-for-dollar spending. So what can they do to stay competitive as this 115-year-old behemoth leans into quantum?
Separation Technology Will Be Key, and IonQ May Be On The Right Track
With IBM slated to receive half of the US Department of Commerce’s two billion dollars in quantum computing funding, it has a huge advantage even before handing over its resources. IonQ is in a very difficult position because it was not among the companies named by the Department of Commerce to receive funding. It will be important for a company like IonQ to try to compete with IBM on its own terms, which may mean separating its efforts from IBM’s superconducting qubits and manufacturing scale.
IonQ today
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- $25.89
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$84.64
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- $68.63
Fortunately, IonQ may be in a position to do just that. The company’s focus on confined quantum computers is unique and could lead to a quantum path with higher connectivity, efficiency, or other advantages.
One deciding factor will be how IonQ technology can grow. With the pre-sale in Q1 2026 of the company’s first chip-based 256-qubit system, IonQ is seeing commercial growth. This is a key advantage over other pure-play quantum firms that have struggled more with sales momentum and especially with monetization outside of large institutional clients. However, whether that means IonQ technology can grow at the same time remains to be seen.
Rigetti May Want to Compete on a Smaller Scale
Rigetti is also unlikely to come close to rivaling IBM’s balance sheet in the foreseeable future, and the company is using the same superconducting qubit approach to IBM as well. This would make it very difficult for Rigetti to differentiate itself technically compared to IonQ.
Rigetti Computing Today
Rigetti Computing
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- $10.30
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$58.15
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- $29.18
Therefore, to remain competitive, Rigetti will need to demonstrate the superiority of its architecture when it comes to gate reliability and speed, error reduction, and so on. Investors should look for signs that Rigetti’s performance-per-qubit or performance-per-dollar is competitive with IBM. If so, even if Rigetti remains much smaller in scale than its biggest rival, it may be able to attract continued investor interest.
Rigetti may also benefit from its previous construction experience. As a specialty manufacturer, the company can strengthen its relationships with government agencies and labs, universities, defense contractors, and similar customers, benefiting from its early entry into this space as it remains smaller than IBM’s planned base operations.
Investors should remember that a win for IBM does not mean a loss for other small firms in the quantum space. Indeed, if IBM successfully strengthens domestic production, it could help streamline supply chains and lower costs for other US firms. In addition, a public investment industry can help create a bigger market for everyone.
Another important consideration is the possible reach of quantum computing as it continues to develop. IBM’s 90+ quantum programs and large enterprise customer base are a plus, but quantum has the potential to expand across many industries, from drug discovery and materials science to national security and all kinds of development. It may not be necessary for individual firms to try to cover all these areas, but as technology continues to advance, advanced technology and targeting can help companies differentiate themselves and find a profitable niche.
Still, the news in the near term is quite positive for IBM, as the company’s shares have nearly doubled in the past month. About two-thirds of analysts covering IBM stock call it a Buy, though there is some concern across Wall Street that the recent rally may not last.
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