Rigetti Computing Faces Volatility Amid Promising Quantum Technology Growth
Shares of Rigetti Computing (NASDAQ: RGTI) have seen significant fluctuations, currently down 61% from their 52-week high but still boasting an impressive 362% rise over the past year. This level of volatility reflects the quantum systems Rigetti aims to develop, which are characterized by the principles of superposition, entanglement, and intrinsic uncertainty.
These theoretical concepts are becoming practical realities. Recent advancements in quantum technology have opened doors for commercial applications, positioning Rigetti to take advantage via its full-stack approach. The year 2025 is expected to be crucial for Rigetti, with key milestones on the horizon that promise a substantial growth pathway.
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Is the current outlook compelling enough for investors to overlook the recent decline and consider Rigetti Computing as a buying opportunity? Here’s what you need to know.
A Quantum Computing Pioneer
Quantum computing has quickly become a prominent theme in the stock market, with major tech firms such as Alphabet and Microsoft making significant investments. These ventures aim to support the next generation of computing, which must be faster and more energy-efficient to solve complex problems. Industry projections estimate the quantum computing market could reach between $90 billion and $170 billion by 2040—an opportunity Rigetti is eager to seize, enhancing the stock’s investment appeal.
Founded in 2013, Rigetti is recognized as the first pure-play quantum computing firm. Its vertically integrated model encompasses a Fab-1 foundry for quantum processing unit (QPU) chip design and fabrication, as well as a robust quantum cloud services platform. This comprehensive approach aims to spur innovation, reduce costs, and ensure the company leads in delivering quantum computing solutions to the market.
Since 2017, Rigetti has provided cloud access to its systems, continually enhancing performance and validating technological advances through collaborations with organizations such as NASA, the U.S. Department of Energy, Moody’s, and Amazon.
Excitement is growing for Rigetti’s upcoming system launch in the second quarter of 2025, featuring a modular design that connects multiple QPU chips. This advancement is anticipated to create a more scalable and powerful quantum platform, with management suggesting it will represent a significant industry milestone.
Image source: Getty Images.
Mixed Financial Trends with a High Valuation
Despite ambitious plans and noteworthy technological achievements, Rigetti’s financial results have not met expectations.
The company is set to announce its fourth-quarter earnings report for the period ending December 31, 2024, on March 5. Wall Street analysts predict a revenue decline of 8.4% for the full year, alongside an earnings per share (EPS) loss of -$0.29. This slowdown is attributed to the limited commercial traction as customers primarily use the product for niche quantum applications and testing.
However, 2025 is expected to be brighter, with Rigetti anticipated to meet new demand by expanding cloud access to its Ankaa-3 system, along with the initial success of its multi-chip system. Revenue for 2025 is forecasted to increase by 42% to $15.6 million, helping to slightly reduce the EPS loss to -$0.20.
Despite these promising projections, investors must weigh Rigetti’s lofty valuation. With a market capitalization of $2.4 billion, the stock is trading at a staggering forward price-to-sales (P/S) ratio of 154 times its 2025 revenue estimates, indicating that the market may already have high expectations for Rigetti’s future growth. Intense competition from other players in the field presents a risk if results do not align with this optimistic outlook.
| Metric | 2024 Estimate | 2025 Estimate |
|---|---|---|
| Revenue | $11 million | $15.6 million |
| Revenue growth (YOY) | (8.4%) | 41.5% |
| EPS | ($0.29) | ($0.20) |
Data source: Yahoo! Finance. YOY = year over year.
Proceed with Caution
In my view, Rigetti Computing’s shares appear too costly to justify a strong buy recommendation at this juncture. I anticipate continued volatility and believe a more prudent investment strategy would be to focus on larger, diversified tech firms engaged in quantum computing themes. Moving into 2025, it will be crucial for Rigetti to validate its business model and achieve significant growth. Thus, it might be wise to monitor this stock from a distance for now.
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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Moody’s. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
