Rigetti Computing Surges 112% as Quantum Hype Fuels Stock Boom
Rigetti Computing (NASDAQ:RGTI) has witnessed a remarkable surge of 112% in its stock value over the past month, soaring from under $15 to over $31 per share. This dramatic increase comes as a combination of significant advancements in quantum computing technology and a surge in retail trading activity, reminiscent of the 2021 GameStop phenomenon. The latest boost occurred following an analyst upgrade from B. Riley, which raised its price target from $19 to $35 per share, propelling Rigetti’s stock up by an additional 11%.
From Obscurity to Quantum Frontiers
Rigetti Computing has emerged as a leading player in the rapidly evolving field of quantum technology. In just a few years, the company has transformed from a niche tech venture to a firm boasting a market valuation of $10 billion. As quantum computing edges closer to practical applications—such as drug discovery and secure encryption—investor enthusiasm has intensified. Retail traders, particularly active on platforms like X and Reddit, are drawn to the potential of quantum technology, viewing it as the next frontier akin to artificial intelligence.
The recent stock surge is not solely attributed to technological progress; it is also fueled by speculative trading. Investors are eager to capitalize on what they perceive as the “next AI” opportunity, pushing the stock into a realm of excitement and volatility.
Government Investments Fueling Innovation
Rigetti’s momentum has been bolstered by several key government contracts. Earlier this month, the company secured a $5.8 million contract from the Air Force Research Laboratory, partnering with Dutch quantum networking firm QphoX. This collaboration aims to develop scalable quantum systems comparable to classical supercomputers. Additionally, a five-year contract for qubit fabrication ensures ongoing funding for research and development.
Internationally, Rigetti signed a memorandum of understanding with India’s C-DAC in September, focusing on hybrid quantum systems. Furthermore, the company has received $4.7 million in grants from U.K. Innovate, strengthening its presence in Europe. Support from initiatives like the DARPA Quantum Benchmarking Initiative and a $5.48 million grant from the Air Force Office of Scientific Research further cements Rigetti’s role in advancing government-backed quantum innovations.
The significance of these contracts extends beyond financial support; they enhance Rigetti’s credibility within the industry, indicating that its technology is moving from theoretical concepts toward tangible applications.
Technological Advancements and Wall Street’s Response
Rigetti’s technological achievements are noteworthy. In July, the company launched the 36-qubit Cepheus-1-36Q, which boasts a median two-qubit gate fidelity of 99.5%. This advancement is now available on Rigetti’s Quantum Cloud Services and is set to be integrated into Microsoft Azure. The successful launch of the 84-qubit Ankaa-3 last December, which achieved similar fidelity, demonstrates that superconducting qubits are approaching practical utility.
Wall Street’s sentiment toward Rigetti has shifted positively, with B. Riley’s recent price target adjustment to $35 reflecting confidence in the company’s execution and market potential. Other firms, including Benchmark and Needham, have also expressed bullish views, reaffirming their recommendations following Rigetti’s second-quarter earnings report.
Despite the optimistic outlook from analysts, Rigetti’s financial performance raises concerns. The company reported a revenue of $1.8 million for the second quarter, overshadowed by expenses totaling $20.4 million. A reported profit of $42.6 million in the first quarter was largely due to one-time non-cash gains rather than operational sales, highlighting the challenges Rigetti faces in achieving commercial viability.
The market’s current valuation of Rigetti at $10 billion appears driven more by speculation than by financial fundamentals. In contrast, competitors like IonQ, which has $1.6 billion in cash reserves, and D-Wave Quantum, with $18.1 million in revenue this year, present stronger financial positions and arguably superior technology.
Investors should approach Rigetti with caution. While the company’s quantum capabilities are impressive, its market valuation is not firmly grounded in financial reality. As the well-known economist John Maynard Keynes noted, “The market can remain irrational longer than you can remain solvent.” For now, Rigetti’s stock reflects a blend of hope and hype, making it a high-stakes investment in an industry still in its infancy.
