If you had been bold enough to invest $10,000 into Rigetti Computing (RGTI 5.26%) at the start of 2023, your investment would be more than halfway to $1 million in value by now.
The market's excitement around quantum computing has pushed Rigetti and its pure-play peers to new heights, after gaining significant momentum in late 2024. Recent advances in the technology have led analysts and investors to turn even more bullish on quantum computing's prospects to deliver major advances in a host of industries ranging from healthcare to materials science to cybersecurity. Analysts at consulting giant McKinsey anticipate the market for quantum chips and related technology booming to $100 billion within the next decade.
Many investors may be wondering if it's too late to get in on quantum computing stocks, or if there's still a lot more growth to come. Could buying $10,000 of Rigetti Computing still put you on track to a million-dollar portfolio?
Image Source: Getty Images.
A pure play in a rapidly evolving industry
Rigetti is a one-stop shop for quantum computing. It develops quantum chips, runs the fabrication facilities to make them, designs the software to use them, and provides a cloud computing platform to access them.
Not only does that make it an easy choice for researchers and developers to build on, it allows Rigetti to iterate quickly and bring new innovations to the market faster than competitors that rely on third parties for some of their manufacturing or deployment. That gives it significant advantages, but the business model also carries significant risks. One is that Rigetti has a lot of overhead. It has burned through $65 million in cash over the last 12 months.
After raising capital through a secondary stock offering in June, it had (as of the end of the second quarter) $571.6 million in cash on its balance sheet. That should provide it some runway to scale up.
In that vein, it's seeing good sales momentum. It announced three new deals in September that will bring in a total of $11.5 million in revenue upon fulfillment. Those deals include one government contract with the Air Force Research Laboratory and two with commercial customers.
The company-specific positive news and the broader momentum in the quantum computing industry pushed the stock up by 173% in September and October alone. But there are a few reasons to be cautious about Rigetti at this point.
NASDAQ: RGTI
Key Data Points
Can Rigetti turn $10,000 into $1 million?
While Rigetti has produced incredible returns for investors over the last three years, there are reasons to be cautious with the stock now. Expecting it to increase in value 100-fold over any reasonable time horizon is asking a lot. If quantum computing emerges as an essential technology with applications that span practically every industry (as we've seen generative AI do), Rigetti could find itself one of the big beneficiaries. But that's a big "if."
Moreover, Rigetti isn't the only game in town. Not only are there a handful of other dedicated quantum computer makers competing to develop the best chips and systems, some of the leading big tech companies are also deeply involved in the space. Well-heeled giants like Alphabet (GOOG 0.25%) (GOOGL 0.28%) and IBM (IBM +0.61%) are at the forefront of research in quantum computing.
Alphabet just published a paper in the prestigious scientific journal Nature demonstrating that its Willow chip had succeeded in running an algorithm that showed the first-ever verifiable quantum advantage. That was a major milestone in showing that the technology could be useful in real-world applications.
Combined with its cloud infrastructure, AI development, and financial resources, Alphabet's quantum computing business could prove a significant threat to Rigetti.
NASDAQ: GOOG
Key Data Points
IBM is also approaching a key point for practical hybrid systems that combine quantum computers with classical computers. Its efforts to use GPUs for real-time error correction of quantum computers' outputs have yielded positive results -- and addressing the issue of quantum computers' high error rates is vital to developing machines whose outputs are usable. Rigetti has also adopted the hybrid approach, making its quantum computers accessible through Amazon Web Services and Microsoft Azure, and supporting Nvidia's NVQLink, a platform that allows conventional AI supercomputers to link with quantum computers.
More worrying, however, is Rigetti's valuation. Investors have bid up the stock based on high expectations that Rigetti's systems will have commercial viability and perform better than those of its competitors, but it's unclear if either of those hopes will ever become realities. The company sports a market cap of $14.3 billion as of this writing. Meanwhile, analysts expect its sales to come in at $21.5 million in 2026. In other words, the stock price is entirely and profoundly speculative right now. With so many threats to its position in the market, it's unclear if its financial results will ever back up its current valuation.
While it's certainly possible Rigetti could increase in value 100-fold from here -- which would make it a $1.4 trillion company, about the current size of Tesla -- it's not something I'd bet on.
