2 Top Quantum Computing Stocks to Watch in November

Early-stage quantum computing firms Rigetti Computing (RGTI) and D-Wave Quantum (QBTS) have experienced significant stock appreciation, with RGTI up 156% YTD and QBTS up 293% YTD, driven by industry hype and distinct business models. Rigetti focuses on vertically integrated infrastructure, akin to a 'pick-and-shovel' approach, while D-Wave specializes in quantum annealing for optimization, reporting 42% Q2 revenue growth to $3.1 million. Despite these gains and potential government interest, both companies are highly speculative, burning substantial cash (D-Wave's $26.5 million operating loss), and trade at extremely high price-to-sales multiples (RGTI 1,110x, QBTS 335x), indicating that widespread commercial viability is still years away and investments remain high-risk.

Analysis

Rigetti Computing (RGTI) and D-Wave Quantum (QBTS) have experienced significant stock appreciation, with RGTI up 156% year-to-date and QBTS up 293% year-to-date, reflecting strong investor interest in the nascent quantum computing sector. Rigetti's strategy involves a vertically integrated, 'pick-and-shovel' business model, manufacturing its own chips at Fab-1, which has garnered attention, including an $8.6 million DARPA grant in 2020. D-Wave focuses on quantum annealing for optimization, achieving a 42% year-over-year Q2 revenue increase to $3.1 million.

Despite revenue growth, D-Wave reported a substantial $26.5 million operating loss, underscoring the significant cash burn typical of early-stage, high-growth technologies. Both companies trade at extremely high price-to-sales multiples—RGTI at 1,110x and QBTS at 335x—suggesting substantial future growth is already priced into their valuations. Commercial viability for quantum computing is projected to be years, if not decades, away, making these investments highly speculative.

Rigetti's 'made-in-America' approach aligns with strategic national interests, potentially attracting further government support despite the White House denying plans to purchase direct stakes in quantum stocks. The overall market sentiment for these companies is mixed and speculative, driven by industry hype and the long-term transformative potential of quantum technology. However, current financial metrics indicate considerable risk and a prolonged path to profitability.

Key Decisions for Investors

• Investors should acknowledge the highly speculative nature of quantum computing stocks like RGTI and QBTS, given their early commercial stage, significant cash burn, and extremely high price-to-sales multiples.
• Monitor progress in commercial viability and specific use cases for quantum annealing (D-Wave) or infrastructure development (Rigetti), as well as any further government support or partnerships.
• Consider these stocks for a watchlist rather than immediate purchase, understanding that substantial capital appreciation has already occurred based on future potential, not current profitability.