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Quantum computing is the new gold rush, and investors are eagerly watching the horizon for the next big breakthrough. With promises of unmatched processing power, it is no wonder that the technology is causing such a stir. Rigetti Computing (RGTI) has made significant strides, reaching an impressive 99.5% fidelity by the end of last year. However, the real magic will begin once it scales those qubits. The company expects to achieve a narrow quantum advantage within three years and anticipates commercial adoption within five.
What’s even more exciting is, according to analysts, a new catalyst is on the horizon for Rigetti investors. The upcoming Defense Advanced Research Projects Agency (DARPA) Quantum Benchmarking contract awards anticipated in February could be a game-changer, and analysts believe Rigetti is perfectly positioned to secure a win. With a projected value of $300 million over seven years, the DARPA initiative could pave the way for the development of high-fidelity, error-corrected qubit systems.
About Rigetti Stock
Rigetti Computing RGTI), based in Berkeley, California, is making waves as a leader in full-stack quantum-classical computing. With a market cap of around $2.2 billion, the company’s proprietary quantum-classical infrastructure seamlessly integrates with both public and private clouds, pushing the boundaries of what quantum computing can achieve.
The company’s growth in 2024 was nothing short of extraordinary amid all the exciting developments in the quantum computing space. Over the past 52 weeks, RGTI’s shares have surged by a stunning 595%, dwarfing the broader S&P 500 Index's ($SPX) 23% gain. In fact, over the past six months alone, the stock has rocketed an astonishing 1,040%.
While Rigetti has undoubtedly delivered a dazzling performance over the past year, the momentum comes with a hefty price tag. Presently trading at an eye-watering 280.68 times forward sales, which is significantly above the sector median of 3.27x, this sky-high valuation reflects the market’s immense belief in Rigetti’s future.
A Closer Look at Rigetti’s Q3 Performance
In November 2024, Rigetti dropped its third-quarter 2024 financial results, marking a crucial point in the company’s journey. For the three months that ended on Sept. 30, 2024, Rigetti’s total revenues were $2.4 million, reflecting a 23% year-over-year dip and falling well below Wall Street’s forecast figure of $3.4 million.
The company’s operating expenses for the period totaled $18.6 million, resulting in a net loss of $14.8 million. On the brighter side, although the company incurred a loss of $0.08 per share, the reported figure marked a significant improvement from the loss of $0.17 per share in the year-ago quarter. Plus, despite incurring losses, Rigetti remains in a strong financial position, with cash, cash equivalents, and securities amounting to $92.6 million as of Sept. 30.
Looking ahead, Rigetti is set to make significant strides on the technical front. In 2025, the company plans to introduce a new modular system architecture, with a 36-qubit system expected by mid-year and a system of over 100 qubits by year-end. Both systems will target a 99.5% median 2-qubit fidelity, marking a major milestone in quantum computing. Additionally, Rigetti aims to develop the 336-qubit Lyra system in the years that follow.
Analysts tracking Rigetti project the company’s loss to narrow a notable 35.9% year over year in fiscal 2024 and improve another 17.8% in fiscal 2025.
What Do Analysts Expect for Rigetti Stock?
RGTI is about to light up the stock market. Alliance Global analyst Brian Kinstlinger has some thrilling predictions. With the highly anticipated DARPA Quantum Benchmarking contract awards decision arriving in February, Kinstlinger is convinced Rigetti is "positioned to be one of the winners,” crediting the company’s strides in fidelity rates, tiling innovations, and recent wins from other DoD research labs.
Kinstlinger sees this potential DARPA deal as more than just a win. It is a massive validation for RGTI. He believes it could lead to a profitable future. With that in mind, the analyst assigned a “Buy” rating and raised his price target for Rigetti shares from $5.50 to $15. This newly raised forecast suggests an exciting 30% upside in the months ahead.
While Wall Street coverage might be limited, the consensus stands at a “Strong Buy.” Among five analysts covering RGTI, four advocate a “Strong Buy,” while one recommends a “Moderate Buy.” RGTI’s average analyst price target of $12.30 represents potential upside of 7.7%, while the Street-high target of $17 suggests that the stock can climb as much as 48.9% from here.
