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While artificial intelligence (AI) dominated the tech narrative in 2024, quantum computing has steadily gained investor attention, with tech giants like Microsoft (MSFT) and Alphabet (GOOGL) strategically investing in quantum hardware, algorithms, and cloud integration to secure leadership in this new frontier. Wall Street sees quantum computing as a game-changer for advancing AI, with its ability to solve problems far faster than traditional computers, potentially revolutionizing industries.
Doug Kass, a prominent fund manager, predicts that 2025 will see quantum computing taking center stage, possibly outpacing AI in market hype. He highlights its transformative potential, especially in encryption and cybersecurity, as industries brace for quantum-resistant solutions.
Amid this evolving landscape, Rigetti Computing (RGTI) emerged as a strong performer in 2024. Wall Street analysts are beginning to recognize its long-term potential, even though quantum computing is still in its early stages. With its innovative technology and ambitious development goals, Rigetti has positioned itself as a strong contender in the race to unlock quantum’s full potential. Let’s dive deeper to see if Rigetti could be a millionaire-maker in the years ahead.
About Rigetti Computing Stock
Based in California, Rigetti Computing (RGTI) is a leader in so-called full-stack quantum-classical computing. It offers access to its superconducting quantum processors through its Quantum Cloud Services (QCS) platform, enabling seamless integration with both public and private cloud systems. Often compared to Nvidia (NVDA) for its infrastructure-focused business model, Rigetti empowers clients to leverage quantum computing without the need for significant in-house investments.
Valued at $3.7 billion by market capitalization, RGTI was a top performer in 2024, surging over 1,986% in the past 52 weeks. This impressive rally has kept pace with its greatest rival, Quantum Computing (QUBT), which saw a 2,309% increase during the same time frame.
Drilling down further, its stock soared nearly 400% in the past month and is now trading near $19, shy of its all-time high of $21.30.
Rigetti’s momentum jump over the past year has pushed its valuation to unprecedented levels. The stock currently trades at a lofty 260 times its sales, far exceeding the sector median of just 3x and its historical average of 16x. This elevated valuation reflects both the speculative enthusiasm surrounding quantum computing and the potential risks associated with such a steep premium.
RGTI Reported Mixed Q3 Results
On Nov. 12, RGTI announced its third-quarter earnings, sparking mixed reactions from investors. The firm reported quarterly revenue of $2.4 million, down 23% from $3.1 million in the year-ago quarter. Despite achieving a gross profit of $1.2 million, Rigetti’s operating loss widened to $17.3 million, resulting in a net loss of $14.8 million. This performance underscores the heavy investments required to advance its quantum technology, including substantial spending on research and development as well as operational costs like office salaries.
Adding to concerns, Rigetti allocated $9.7 million to stock-based compensation in 2024. While this approach conserves cash and motivates employees, it dilutes existing shareholders by increasing the number of shares outstanding, potentially impacting future returns.
On an adjusted basis, Rigetti aligned with analysts’ forecasts, reporting a loss of $0.08 per share, narrowing the loss from $0.17 in the same quarter last year.
Despite these financial headwinds, Rigetti maintains a robust cash position of $20.3 million, providing a strong foundation to execute its strategic plans. Key initiatives include the development of a 36-qubit system slated for mid-2025 and a more ambitious 100-plus-qubit system anticipated later this year.
Also, Rigetti Computing’s revenue is forecast to grow by approximately 28.8% this year, outpacing the broader computer hardware industry’s average growth of 20.75%. Over the next five years, projections suggest that Rigetti’s revenue growth could exceed 200%.
Recent News About RGTI
On Dec. 10, Rigetti Computing and Quantum Machines announced a major breakthrough in quantum computer calibration using AI. As part of the "AI for Quantum Calibration Challenge," they automated the calibration of a 9-qubit Rigetti Novera QPU integrated with Quantum Machines’ OPX1000 control system and NVIDIA DGX Quantum. “This milestone demonstrates AI’s transformative potential for quantum computing,” said Rigetti CTO David Rivas. With automated tools validated, the industry is poised to overcome barriers in scaling to thousands of qubits while maintaining high-performance standards. This type of AI implementation could save a lot of money for the computing industry, especially for a younger company like Rigetti, helping it raise capital that can be used for further research and development to achieve more milestones.
On Nov. 24, Rigetti Computing secured $100 million through a direct offering of 50 million shares priced at $2 each. The $100 million injection strengthens Rigetti’s financial position, enabling accelerated quantum technology advancements and reinforcing investor confidence in its long-term viability.
What Do Analysts Say About RGTI Stock?
The consensus rating on Wall Street for RGTI stock is “Strong Buy.” Among five analysts, the breakdown includes four “Strong Buy” ratings and one “Moderate Buy.” However, the stock has already exceeded its mean price target of $5.20 and the Street’s high price target of $12. This implies a potential 73% downside to the mean and 36% to the high target
The Bottom Line
At this time, Rigetti Computing appears overvalued. However, the company, along with other quantum computing stocks, is known for significant volatility, often delivering substantial gains with each milestone achieved.
Nevertheless, the broader quantum computing market presents a compelling growth narrative, with McKinsey forecasting it to reach between $45 billion and $131 billion by 2040. These figures could be an immense opportunity for Rigetti to capture market share as its technology progresses. Despite this potential, prospective investors may want to wait for a more favorable valuation before putting their money into this high-potential but speculative stock.
