RGTI Stock: Why is Rigetti Computing Up 1,720% In the Past 12 Months?

Rigetti Computing [RGTI] is a California-based company that builds and deploys quantum computing systems. It also operates a cloud platform, which allows enterprises to take advantage of quantum processors remotely.

This stock spotlight will look at the technology and performance of Rigetti’s latest quantum computer, launched at the end of last year. It will unpack what is behind RGTI’s surge over the past 12 months, as well as the medium-term outlook on the company. It will also outline some possible reasons to be cautious on the stock.

The global quantum computing industry is forecast by MarketsandMarkets to grow at a CAGR of 32.7% from a valuation of $1.3bn in 2024 to $5.3bn in 2029. Rigetti is expected to be one of the market leaders. 

Flagship System 

Rigetti launched its latest flagship system, the 84-qubit Ankaa-3, at the end of December. It features what the company describes in a press release as an “extensive hardware redesign that enables superior performance”.

The system can process information much faster than its previous flagship system and with a 99.5% accuracy rate in its quantum movements, making it more precise than its competitors’ systems. 

“As we continue the journey towards fault tolerance, we are constructing computing systems with capabilities that have not been seen before,” said Rigetti Chief Technology Officer David Rivas in the press release. 

Ankaa-3 has already been made available to enterprise customers using its cloud platform and will be accessible through Amazon’s [AMZN] cloud quantum computing service Braket and Microsoft [MSFT] Azure at some point in Q1 2025. 

RGTI Stock Leaps on Willow News 

News of the Ankaa-3’s launch has helped fuel a major rally in RGTI stock. Investors have been snapping up Rigetti’s shares since Alphabet’s [GOOGL] Google unveiled its quantum computing chip, Willow, in early December.

RGTI stock has surged 319.86% in the past month through January 7 and is up 20.51% year-to-date already. The stock set an all-time high of $21.42 on January 6, having slumped to a 52-week low of $0.66 on September 9. It is up 1,720.79% in the past 12 months.

Rigetti vs. D-Wave and IonQ 

Rigetti brought in $2.37m in revenue in Q3, down from $3.11m in the year-ago quarter. Revenue for the first nine months of 2024 came in at $8.52m versus $8.63m for the first nine months of 2023. 

The company’s net loss for the September quarter narrowed to $14.83m from $22.22m in Q3 2023.

However, the nature of Rigetti’s business means it is burning through a lot of cash in order to scale its operations. Operating expenses in Q3 2024 were $18.55m, slightly lower than the $19.10m spent a year earlier. Its cash position, as of September 30, is $92.6m. 

CEO Subodh Kaikarni expressed his optimism about the company’s future prospects in the earnings release: “We believe that superconducting qubits are the leading modality for high performance quantum computers.”

In contrast to Rigetti, IonQ [IONQ] generated $12.4m in revenue in Q3, 102% up on $6.1m a year earlier, while D-Wave [QBTS] generated $2.6m in revenue, up 51% year-over-year from the $1.7m reported in Q3 2023. 

Here is how the fundamentals of the three quantum computing stocks compare. 

Source: Yahoo Finance

All three quantum computing stocks could be considered highly overvalued given their P/S ratios. 

For context, QBTS stock is currently trading at half of the valuation for the entire quantum industry in 2029. RGTI stock’s current value is just under and IONQ is worth more than twice MarketsandMarkets’ forecast. 

For a more in-depth comparison of RGTI stock, IONQ stock and QBTS stock, read this OPTO Foresight piece. 

RGTI Stock: The Investment Case

The Bull Case for Rigetti 

Right now, Rigetti does not have any lucrative contracts. If the company were to sign a deal with a big-name firm, however, it could be rocket fuel for the Rigetti share price. 

In the meantime, the company should have sufficient funds to support its operations through to the end of 2026 following a $100m raise completed in November. 

“We are seeing a great deal of interest from national labs and academic institutions for on-premises quantum computers to pursue hands-on R&D,” said Kulkarni in a press release, adding that it should attract interest from the private sector as the technology advances further.

The Bear Case for Rigetti

There are several reasons to be cautious on RGTI stock. 

The main one is that the quantum computing industry is still in its infancy and, unlike generative AI, quantum computing may never actually be useful to the average enterprise. 

The hype surrounding Google’s Willow announcement has meant many investors are pouring into quantum computing stocks with little knowledge of what it is and what it will and will not be able to do. 

As Andrew Left’s Citron Research put it: “Buying RGTI [stock] based on Google’s quantum success is as misguided as believing every TikTok guitarist is the next Taylor Swift.”

RGTI stock’s rapid accession and overvaluation is attracting the interest of short sellers. As of December 30, 16.9% of its float was short, up from 8.9% at the end of 2023.

Conclusion 

The hype around quantum computing is not going away. While there is potential for investors to see a quick return, recent share price movements might suggest that RGTI stock is trending on meme mania as opposed to any genuine investment thesis.