For the past year or so investors have been looking for one thing: the next best artificial intelligence (AI) growth story. And for good reason. AI has the potential to transform business and our daily lives — saving time and money and leading to game-changing discoveries. For example, AI could streamline factory operations, boosting cost savings for a company, or an AI-driven drug discovery program may result in better drugs faster.
Analysts predict that today’s $200 billion AI market will surpass $1 trillion by the end of the decade, so companies and investors that get involved early could score a major win. Now the big question is: Which stocks should you choose?
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You’ve probably seen many promising AI players out there, including companies that are already generating revenue from the technology. Today, let’s consider one of those current winners — and a younger company that could see explosive gains down the road. I’m talking about Amazon (NASDAQ: AMZN) and Rigetti Computing (NASDAQ: RGTI). Which makes the better AI buy today? Let’s find out.
Image source: Getty Images.
The case for Amazon
Amazon is benefiting from AI in its two main businesses: e-commerce and cloud computing. In e-commerce, Amazon uses AI for a variety of tasks to streamline operations and therefore reduce expenses. For example, AI helps Amazon choose the shortest and fastest delivery routes for packages, and this results in lower cost to serve.
But where Amazon’s AI strengths really stand out are in the area of cloud computing. Through Amazon Web Services (AWS), the company has gone all in on AI, offering customers products and services to suit just about all of their needs. AWS offers a variety of AI chips — from premium Nvidia graphics processing units (GPUs) to its own in-house developed chips for cost-conscious customers. The cloud unit also offers a fully managed service called Amazon Bedrock that allows customers to adapt top large language models to their projects.
Finally, AWS has developed AI-powered apps and could win in the agentic AI market as it helps companies design their own AI agents. This involves the application of AI to real-world problems and could represent the next phase of AI growth.
It’s also important to keep in mind that, as the world’s leading cloud services provider, AWS has a tremendous audience already present — and potentially ready to launch AI.
The case for Rigetti
Rigetti actually operates in another high-growth and complementary technology — quantum computing. The company builds and operates such systems and produces processors at its own facilities. This means Rigetti has control over the production of its multi-chip quantum processor technology. Rigetti has made its technology available to cloud customers — through companies including Amazon — since 2017 and this has resulted in revenue growth. Though it’s important to keep in mind that Rigetti is still in the very early stages of its growth story and hasn’t yet reached profitability.
RGTI Revenue (Annual) data by YCharts
So, what exactly is quantum computing, and how does it relate to AI? Quantum computing differs from classical computing as it relies on certain rules of physics. So instead of using bits as zeros or ones to process data, quantum computers use qubits — and values can be a zero, a one, or both. Quantum computers can handle operations much more quickly than classical computers — we’re talking a few minutes compared to thousands of years for certain problems. That’s why they could be extremely useful for AI systems, helping them to process data even more quickly.
The technology is promising, and Rigetti has progressed — for example, its newest flagship quantum computer recently reached a big milestone. The Ankaa-3 halved error rates last year, a key achievement considering one of the challenges of quantum computing is the high error rate.
If Rigetti continues along this path, it could be a winner in both quantum computing and AI down the road.
Amazon or Rigetti?
Considering all of these points, which company represents the better AI buy today? The answer depends on your investment strategy and comfort with risk. Certain very aggressive investors looking for a potential multi-bagger may prefer to get in on a company that’s earlier in its growth story and has the potential to explode higher on any potential positive news. For these investors, Rigetti may be the best bet.
But for most investors, Amazon, a company with a solid track record of earnings growth along with a billion-dollar AI business — AWS, thanks to AI, recently reached a $115 billion annual revenue run rate — is the better buy. It offers investors a dose of security along with the potential to keep on winning as this exciting AI market develops.
Don’t miss this second chance at a potentially lucrative opportunity
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*Stock Advisor returns as of February 3, 2025
John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Adria Cimino has positions in Amazon. The Motley Fool has positions in and recommends Amazon and Nvidia. The Motley Fool has a disclosure policy.