Where Will Rigetti Computing Be in 3 Years?

Rigetti Computing (RGTI) has seen its stock rebound sharply from an all-time low to $13.50, driven by recent product advancements like the commercial Novera QPU and the 84-qubit Ankaa-3 system, securing key customers, and a leadership transition. The quantum computing developer plans to launch a 36-qubit system in 2024 and over 100 qubits by 2026, with revenue projected to grow from $11 million in 2024 to $35 million in 2026. Despite these developments and a projected 34.8% CAGR for the broader quantum computing market, Rigetti faces substantial valuation scrutiny, trading at 105 times its 2026 projected sales, compounded by warnings from its CEO and Nvidia's CEO regarding the long-term horizon for practical quantum computing applications.

Analysis

Rigetti Computing (RGTI) has seen a significant stock rebound, climbing from an all-time low of $0.38 in May 2023 to $13.50, recovering from an initial post-SPAC decline. This recovery is driven by recent product advancements, including the launch of the 9-qubit Novera QPU and the 84-qubit Ankaa-3 system with 99% error detection. Key customer acquisitions by SQMS, AFRL, and Horizon Quantum Computing have also contributed to renewed investor interest.

The company plans to launch a 36-qubit modular system in 2024 and a nonmodular system exceeding 100 qubits by late 2026, both targeting 99.5% median gate fidelity. Analysts project revenue growth from $11 million in 2024 to $16 million in 2025 (+41%) and $35 million in 2026 (+127%), fueled by commercial system shipments and cloud platform expansion.

However, Rigetti faces substantial valuation concerns, trading at an enterprise value of $3.7 billion, or 105 times its projected 2026 sales. This high valuation is underscored by CEO Dr. Subodh Kulkarni's warning to "tamp down" near-term expectations and Nvidia CEO Jensen Huang's view that "useful quantum computers are still decades away." Profitability is not anticipated in the near term.

Despite the quantum computing market's projected 34.8% CAGR, Rigetti's current valuation exceeds 30 times even a bullish $120 million revenue estimate for 2025. The stock is expected to remain highly volatile and news-driven, carrying significant downside risk before achieving a more sustainable valuation relative to its long-term potential.

Key Decisions for Investors

• Investors should exercise extreme caution due to Rigetti's highly speculative valuation, trading at 105x 2026 projected sales, and the long-term horizon for practical quantum computing applications as indicated by industry leaders.
• Monitor the company's progress on its ambitious product roadmap, particularly the 36-qubit and >100-qubit system launches, as these are critical for validating future revenue growth projections.
• Be prepared for significant stock volatility and potential downside risk, as the current price may not reflect a sustainable valuation given the early stage of market development and the company's lack of near-term profitability.