Rigetti Computing is currently engaged in an intense competition to dominate the quantum computing market.
Quantum computing is poised to address some of humanity’s most complex challenges and has the potential to spawn numerous new technologies and markets in the future. It leverages principles of physics to elevate computing technology to levels that are often challenging to grasp. As an illustration, Google (Alphabet) announced late last year that it had developed a quantum computing chip capable of performing calculations in five minutes that would take today’s most advanced computers 10 septillion years to complete—a time span far exceeding the age of the universe.
This promise has attracted investors to early-stage quantum computing firms like Rigetti Computing (RGTI 0.36%), as they seek potentially transformative returns from the commercialization of these technologies. However, there is a question of whether these investments have been made prematurely.
To cut through the quantum computing excitement, it’s essential to understand the basics. Current digital information is stored in classical bits, which function like a light switch—either on or off, represented by ones and zeros. In quantum computing, the fundamental unit is a qubit, capable of existing in a state of one, zero, or a combination of both, allowing for more complex data processing and significantly enhanced performance.
Nevertheless, maintaining qubits is a challenging endeavor. They require highly controlled environments and are susceptible to computational errors. Companies developing quantum computers must not only increase the number of qubits but also reduce the error rates. Currently, quantum computing technology is not yet ready for practical applications.
Industry leaders have expressed their views on the timeline for usable quantum computers. In January 2025, Nvidia CEO Jensen Huang suggested that practical quantum computing is 15 to 30 years away during an analyst Q&A session. Similarly, Rigetti Computing’s CEO Subodh Kulkarni acknowledged that their quantum computers are not yet suitable for practical use. Earlier in the year, Alphabet CEO Sundar Pichai estimated that usable quantum computers could be realized in five to 10 years.
There is considerable uncertainty surrounding the timeline for achieving real-world applications of quantum computing. However, many experts in the field agree that significant developments are not expected imminently. According to Rigetti Computing’s investor presentation, the market opportunity for quantum computing providers is not projected to exceed $1 billion to $2 billion until after 2030.
For investors considering Rigetti Computing in 2025, the outlook is uncertain. The company’s current market capitalization is $2.6 billion. Rigetti faces competition from other emerging companies like IonQ, as well as established tech giants such as IBM, Amazon, Alphabet, and Microsoft.
If the quantum computing industry is worth $2 billion by 2030 and Rigetti claims a tenth of the market, that translates to $200 million in annual revenue, resulting in a price-to-sales ratio of 13 based on hypothetical revenue projections five years into the future. Furthermore, it remains unknown whether Rigetti will be profitable by that time.
Compounding these challenges is the issue of share dilution. The number of outstanding shares has doubled since Rigetti went public, necessitating twice the revenue to maintain the same stock valuation. The rate of share increase between now and 2030 remains uncertain. A scenario exists where the business performs better than expected, but diluted shares detrimentally affect investment returns.
Considering these factors, the stock’s attractiveness is questionable. It is plausible that established cloud companies involved in quantum computing, such as Amazon, Microsoft, and Google, will dominate the early market. Google recently acquired a cloud security firm for $32 billion, suggesting that if a smaller company like Rigetti, valued below $3 billion, was at the forefront, it might already have been acquired by a larger player.
In conclusion, while Rigetti Computing holds potential, the company’s stock resembles a lottery ticket, with the results potentially taking half a decade to materialize. There are likely better investment opportunities available, and investors might consider exploring alternatives.
