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Mad Money host Jim Cramer commands retail investor attention, and he recently raised red flags about quantum computing stocks, suggesting that current enthusiasm might be getting too far ahead of business fundamentals.
While companies like Rigetti Computing (RGTI) and IonQ (IONQ) have captured investors’ imaginations with promises of revolutionary technology, Cramer warned that 2025 might be too early for commercial breakthroughs in this sector.
His cautionary tale draws parallels to other overhyped industries that eventually faced reality checks, including EV charging companies, certain electric vehicle (EV) manufacturers, and biotech companies. It is a timely reminder that not every promising technology translates into profitable investments.
Is RGTI Stock a Good Buy Now?
Rigetti Computing is at the forefront of quantum computing development. Founded in 2013, the Berkeley-based company designs quantum computers and their superconducting processors in-house. The company has carved out a unique position in a disruptive landscape by making its technology accessible through its Quantum Cloud Services platform.
Valued at a market capitalization of $5.15 billion, RGTI stock has rallied an astonishing 1,720% in the past year. Priced at 468x trailing sales, the quantum computing stock is among the most expensive entities on the planet.
Investors are betting on its latest technological achievement, the 84-qubit Ankaa-3 system. Rigetti Computing has developed a new quantum computer called Ankaa-3, featuring 84 qubits (quantum bits) that work together to solve complex calculations. Importantly, it performs calculations correctly 99.5% of the time, a significant achievement in quantum computing where errors are common.
The company builds these quantum chips using a proprietary manufacturing technique called ABAA, which helps achieve this level of precision. While it represents a significant technological breakthrough, Rigetti faces the challenge of turning the advanced technology into a profitable business.
Rigetti has secured strategic partnerships with tech giants like Amazon (AMZN) and Microsoft (MSFT) to offer quantum computing through their cloud platforms in early 2025. However, its financial position raises concerns. Despite a recent $100 million capital raise and $92.6 million in existing cash, Rigetti’s Q3 revenue fell 23% year-over-year to just $2.4 million, and operating losses were much higher at $17.3 million.
Out of the five analysts covering RGTI stock, four recommend “Strong Buy” and one recommends “Moderate Buy.” The average target price for the tech stock is $5.20, down over 50% from current levels.
Is IONQ Stock a Good Buy?
Although down 34% from its 52-week high, IonQ stock has almost tripled in the past year, valuing the company at a market cap of $10.73 billion. Like RGTI, IonQ builds quantum computers accessible through cloud platforms like AWS, Microsoft Azure, and Google Cloud (GOOGL) (GOOG). The company offers 20-qubit systems and has pioneered quantum computing as a cloud service. IonQ’s Forte quantum computer currently operates with 36 algorithmic qubits, with plans to reach 1,000 qubits by 2028.
However, IonQ’s financials paint a cautionary picture. Despite a projected market opportunity of $65 billion by 2030, its current revenue has been modest at $37 million over the past four quarters. It has also experienced significant losses of $171 million and a negative free cash flow of $120 million.
While the company maintains a healthy cash position of $365 million, its almost $11 billion market cap (30x projected 2027 revenue) indicates extremely optimistic expectations.
Notably, IonQ faces stiff competition from tech giants like International Business Machines (IBM), Microsoft, and Google, who have substantial resources and enterprise relationships. While IonQ’s technology shows promise, the combination of early stage development, uncertain market share, and high valuation makes it a speculative investment at current levels.
Out of the five analysts covering IONQ stock, two recommend “Strong Buy,” one recommends “Moderate Buy,” and two recommend “Hold.” The average target price for the quantum computing stock is $26, below its current trading price.
The Key Takeaway on Quantum Computing Stocks
McKinsey estimates quantum computing could add $1.3 trillion in economic value by 2035, particularly in verticals such as pharmaceutical development and AI training. However, RGTI and IONQ trade at lofty valuations, making them high-risk investments at current levels.
