RGTI Stock: What’s Next After An 1,100% Rally?

Rigetti Computing (NASDAQ: RGTI) has emerged as a standout performer in the quantum computing sector, with its stock price surging a remarkable 1,080% over the past twelve months. This extraordinary growth reflects the mounting excitement around quantum computing technology and its potential to transform multiple industries.

The fundamental appeal of quantum computing lies in its departure from traditional binary computing systems. While conventional computers process information using bits that exist in either zero or one states, quantum computers utilize qubits that can exist in multiple states simultaneously. This quantum superposition enables these systems to perform complex calculations and process vast datasets by exploring numerous potential outcomes concurrently.

The practical applications span diverse sectors including financial modeling, drug discovery, and materials science. However, the technology faces a critical challenge: error rates increase proportionally with system complexity and higher qubit counts. This inherent volatility is characteristic of emerging technologies but represents a significant hurdle for widespread adoption.

Despite these challenges, the quantum computing industry has achieved notable milestones. Major technology companies including Google, IBM, and Rigetti have successfully demonstrated scalable quantum systems with dozens of qubits, marking crucial progress toward practical applications. IBM leads the field with its 1,121-qubit Condor processor and ambitious plans to develop 100,000-qubit systems by 2033. Now, for investors looking for potential gains with less volatility, the High Quality portfolio has comfortably outperformed the S&P 500, delivering over 91% returns since inception.

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Rigetti’s Technology and Product Portfolio

Rigetti distinguishes itself in the quantum computing field by utilizing superconducting qubits, specifically tunable transmons. These are controlled by microwave pulses at extremely low temperatures within dilution refrigerators. Their Ankaa-class architecture uses a square lattice of qubits and tunable couplers to enable high-fidelity two-qubit operations.

Rigetti’s product strategy includes both entry-level and advanced quantum processing units:

• The Novera QPU is their entry-level, commercially available offering. It features a 9-qubit processor in a 3×3 array, designed for researchers and developers focused on hybrid quantum algorithms, calibration, and quantum error correction.
• More advanced systems include the Ankaa-2, an 84-qubit system available via cloud platforms, and the newer Ankaa-3.
• The Ankaa-3 boasts significant hardware redesigns, achieving median iSWAP gate fidelity of 99.0% and fSim gate fidelity of 99.5%.

Rigetti plans to develop a 100-qubit system by the end of the year. These systems prioritize achieving high two-qubit gate fidelity rates exceeding 99%, a crucial factor for practical quantum error correction. Rigetti’s technology is accessible through its Quantum Cloud Services platform and partnerships with major cloud providers like Amazon Braket and Microsoft Azure.

Financial Reality

While Rigetti’s technological achievements are impressive, the financial picture reveals the early-stage nature of the quantum computing market. The company generated only $9.2 million in revenue over the last twelve months while reporting an operating loss of $74 million during the same period. These figures underscore that quantum computing remains primarily in the developmental phase rather than widespread commercial deployment.

The stock’s performance history illustrates the inherent volatility of emerging technology investments. During the 2022 inflation shock, RGTI’s value plummeted 96% compared to the S&P 500’s peak-to-trough decline of 25.4%. This dramatic differential demonstrates the heightened risk associated with quantum computing stocks during adverse market conditions.

Investment Outlook

Rigetti represents a classic high-risk, high-reward investment opportunity within the quantum computing sector. The company’s future trajectory depends heavily on continued technological breakthroughs and effective cost management. Success in scaling quantum computer production could drive significant stock appreciation, making RGTI essentially a bet on both quantum computing’s future potential and Rigetti’s ability to capture market share.

The company has established relationships with notable clients including NASA, Phasecraft, and Standard Chartered, providing some validation of its technology’s commercial viability. As quantum computing technology continues advancing, improved accuracy and broader industry adoption should benefit established players like Rigetti.

However, investors must weigh these opportunities against substantial risks. The technology remains experimental, competition from well-funded giants like IBM and Google is intense, and the timeline for widespread commercial adoption remains uncertain. There always remains a meaningful risk when investing in stocks that are far from widespread commercial deployment. Consider Trefis High Quality (HQ) Portfolio which, with a collection of 30 stocks, has a track record of comfortably outperforming the S&P 500 over the last 4-year period. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.