The stock market is on a tear. Driven by renewed enthusiasm for artificial intelligence (AI), the S&P 500 index is up 6.3% over the last month, while the tech-heavy Nasdaq Composite is up a whopping 9.4%.
The run, along with a major announcement from the U.S. Commerce Department, has kicked off a rally in quantum computing stocks. As investors look for the "next AI," they're snapping up shares of companies like IonQ, D-Wave, and, of course, Rigetti Computing (RGTI -5.05%).
With the recent launch of its most powerful quantum system to date, many investors believe that Rigetti is one of the most promising quantum pure-plays around. But what about the stock? After jumping more than 50% in a month, is it still a buy? Could shares of Rigetti reach $50?
RGTI Rigetti Computing
NASDAQ · As of 11:15 AM ET 10/22/26
Why Rigetti is turning heads in the quantum computing race
Rigetti builds superconducting quantum computers, using the same basic approach as Alphabet's Google and IBM. This gives the company's systems a few advantages: speed and scale.
Rigetti just launched its most powerful computer to date, the 108-qubit Cepheus-1-108Q. ,
Beyond the tech itself, the company designs and builds everything in-house, from the quantum chips to the software that runs on them. If its approach delivers, Rigetti would own the entire vertical, giving it a major leg up.
As for financials, revenue nearly tripled year over year last quarter, and the company is sitting on more than $400 million in cash, double what it held a year ago.
And of course, there is the recent news: The U.S. government will provide $100 million to Rigetti as part of a larger $2 billion quantum investment package. That's a pretty big deal.
Image source: Getty Images.
The risks hiding behind Rigetti's explosive stock rally
Revenue nearly tripled last quarter, rising from $1.5 million to $4.4 million. At that scale, the growth percentages don't mean much. And the company is still deeply cash-flow negative, burning $20 million in free cash flow (FCF) this quarter.
Of course, there is the valuation issue: Shares currently trade at a price-to-sales (P/S) ratio of nearly 900. The word extreme could be applied here.
Rigetti's technology is promising, no doubt, but it is still just that -- a promise. The company has a runway to keep researching for years, but that's essentially what you're buying here -- research. This is not really a true business at this point.
And as exciting as the government deal is, the $100 million in funding is essentially a grant. The money will be used to fund research and development on an unproven technology in its infancy.
Could Rigetti stock actually reach $50?
So, could shares hit $50? Absolutely. In fact, they probably will. But critically, I don't think they'll stay there.
Once the current rally cools and investors start fleeing speculation, a company trading at 900 times sales with $4.4 million in quarterly revenue is going to get crushed.
