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As China’s DeepSeek continues to take the world by storm with its cheaper and more energy-efficient artificial intelligence (AI) models, companies at the forefront of the AI revolution have seen their stocks come under pressure. However, DeepSeek’s onslaught is not just restricted to tech titans like Nvidia (NVDA), Microsoft (MSFT) or Google (GOOG); stocks from the quantum computing industry are also reeling.
Names like Quantum Computing (QUBT), IonQ (IONQ), D-Wave Quantum (QBTS), and Rigetti Computing (RGTI) fell by as much as 9% on Jan. 27 in response to the news.
Although Rigetti is staging an impressive 13%-plus rally on Friday, Jan. 31, the stock is still more than 35% below its 52-week high. Is this an opportunity for investors to buy up shares at a discount?
About Rigetti Computing Stock
Founded in 2013 by Chad Rigetti, a former International Business Machines (IBM) researcher, Rigetti Computing is a prominent player in the quantum computing industry, focusing on developing and integrating quantum hardware and software solutions. The company specializes in building quantum computers and the superconducting quantum processors that power them. Its market capitalization currently stands at $2.4 billion.
Over the past year, RGTI stock has witnessed a quantum leap of 1,007%.
Rigetti Is Not Yet Profitable
Rigetti is yet to be profitable as the results for the most recent quarter saw the company reporting a miss on both revenue and earnings.
Total revenue of $2.4 million represented a decline of 23.4% from the prior year. However, losses narrowed to $0.08 per share from $0.17 per share in the year-ago period.
Net cash used in operating activities came in at $42.1 million compared to $38.2 million for the nine months that ended Sept. 30 as the company closed the quarter with a cash balance of $20.3 million. This was much higher than Rigetti’s short-term debt levels of $13.4 million. Rigetti’s CEO has emphasized that investors should be focusing on its research and tech development, instead of on metrics like revenue growth.
Exciting Tailwinds
The company’s long-term prospects appear promising. Operating in a quantum computing industry that consulting giant McKinsey estimates could generate up to $2 trillion in value by 2035, Rigetti is strategically positioned to capitalize on this transformative market across sectors such as chemicals, life sciences, finance, and mobility.
The company’s competitive edge stems from its strategic partnerships, cutting-edge technology, and its Fab-1 facility, which supports in-house chip fabrication and advances its quantum computing capabilities. Rigetti has already made a breakthrough by developing the world’s first multi-chip quantum processor, a crucial step toward scalable quantum computing. Its revenue model revolves around the sale of quantum processing units and cloud-based Quantum Computing as a Service (QCaaS), which enables organizations to access its computing power remotely.
A supportive regulatory environment under President Donald Trump, who advocates for minimal technology oversight, could serve as a tailwind for Rigetti, reducing bureaucratic hurdles and accelerating its quantum development initiatives. Fewer regulatory constraints would likely allow the company and its peers to innovate at a faster pace, further enhancing the technological landscape.
Rigetti’s collaboration with Quantum Machines is another significant development, as it aims to address one of quantum computing’s most pressing challenges — qubit calibration. By leveraging AI-powered quantum calibration, this partnership has the potential to streamline and automate a complex process, ultimately improving system efficiency and reliability.
With over a decade of experience in the nascent quantum computing sector, Rigetti continues to deliver meaningful advancements. On Dec. 23, 2024, the company introduced its 84-qubit Ankaa-3 quantum computer, marking a critical milestone in its product roadmap. Hardware enhancements in the Ankaa-3 system have resulted in superior computational performance compared to previous models, bolstering Rigetti’s competitive positioning. This technological progress is expected to attract new research collaboration and commercial partnerships, further strengthening its market presence.
Looking ahead to 2025, Rigetti has outlined an ambitious roadmap that underscores its commitment to high-fidelity quantum computing. The company plans to release a cluster of four interconnected 9-qubit chips by mid-2025, targeting a two-qubit fidelity level exceeding 99.5%. As the year progresses, Rigetti aims to launch a 100-plus qubit system with sustained 99.5% two-qubit fidelity, reinforcing its dedication to scaling quantum computing technology. If successfully executed, this roadmap could position Rigetti as a leader in the race toward practical quantum applications, unlocking significant commercial opportunities and reshaping its financial trajectory.
Analyst Opinions on RGTI
Analysts have attributed a rating of “Strong Buy” for the stock with a mean target price and high target price that have already been surpassed. As such an upward revision is due. Out of five analysts covering the stock, four have a “Strong Buy” rating and one has a “Moderate Buy” rating.
