Two years ago, IonQ‘S (IONQ -2.55%) The stock fell to an all-time low of about $3. The quantum computing company lost its luster as it missed its own growth estimates, suffered heavy losses and struggled with the departure of its co-founder.

These problems overshadowed the growth potential of its “trapped ion” technology, which shrinks the width of quantum processing units (QPUs) from a few feet to a few inches, as well as the broader disruptive potential of its quantum computing systems – which can process tasks much faster than traditional binary computing systems.

Image source: Getty Images.

But today, IonQ stock is trading at around $40. Its stock rose as the company signed new contracts, increased its exposure to the artificial intelligence (AI) market through partnerships and new testing, repeatedly raised its forecast and agreed to acquire its industry rival Qubitekk. The company now expects its revenue to grow 75-93% in 2024, while analysts expect 89% growth.

These growth rates are staggering, but IonQ is still unprofitable and its shares trade at a whopping 109 times next year’s sales. So instead of chasing IonQ at these meme stock levels, it might be wiser to buy two other growth stocks that are trading at more reasonable valuations: SentinelOne (p -1.80%) And Rocket Lab USA (RKLB -1.23%).

An AI-driven cybersecurity game: SentinelOne

SentinelOne is a cybersecurity company that plans to replace all human analysts with AI algorithms on its Singularity XDR (Extended Detection and Response) platform. An automated approach is believed to be faster and less error-prone.

The company delivers its XDR services through a mix of on-premise appliances and cloud-based services. This hybrid approach protects it from internet outages that fully cloud-native cybersecurity platforms such as. B. can be disruptive CrowdStrikeThe Falcon.

SentinelOne’s revenue more than doubled in fiscal 2021, fiscal 2022, and fiscal 2023 (which ended in January 2023). The company continued to attract large customers (those generating at least $100,000 in annual recurring revenue) while its dollar-based net revenue retention rate remained well above 100%. But revenue rose 47% in fiscal 2024 as macroeconomic headwinds made it harder to win new contracts, and the company expects growth of 32% this year.

This slowdown and SentinelOne’s continued losses unsettled bulls. But from fiscal 2024 to fiscal 2027, analysts still expect revenue growth at a compound annual growth rate (CAGR) of 27% as the macroeconomic environment stabilizes. Its stock still appears reasonably valued at less than eight times next year’s sales, and the company should narrow its net losses as economies of scale kick in. Its low enterprise value of $7 billion could also make it a tempting takeover target for a larger industry rival.

A promising space stock: RocketLab USA

RocketLab develops partially reusable rockets for NASA, the US Space Force, the Swedish National Space Agency and other major customers. Its flagship Electron orbital rocket, which has successfully launched 57 times in the last seven years, can carry payloads of up to 300 kilograms. But its next rocket, the Neutron, will have a far more impressive maximum capacity of 15 tons when it launches next year.

RocketLab has already launched six Electron rockets in 2021, nine rockets in 2022 and ten rockets in 2023. An additional twelve missiles were fired in the first nine months of 2024, and the third quarter ended with a backlog of $1.05 billion. Total revenue increased 240% in 2022, but only grew 16% in 2023. An increase of 77% is expected in 2024.

With an enterprise value of $13 billion, RocketLab stock could look expensive at 30 times next year’s sales. However, from 2023 to 2026, analysts expect revenue to grow at a compound annual growth rate (CAGR) of 55% as the company ramps up its product launches. The company is also expected to gradually reduce its net losses as it expands its business. RocketLab still faces stiff competition from SpaceX and other private startups, but there could be plenty of room for growth for all of these companies in this emerging market.