2 Top Quantum Computing Stocks to Watch in November

Quantum computing stocks Rigetti Computing (RGTI) and D-Wave Quantum (QBTS) have seen substantial year-to-date gains of 156% and 293% respectively, driven by early-stage industry developments. Rigetti focuses on a vertically integrated 'pick-and-shovel' model providing quantum infrastructure, including chip fabrication, and has received government grants. D-Wave specializes in quantum annealing for optimization, reporting a 42% Q2 revenue increase to $3.1 million from sales to research institutions. However, the sector remains highly speculative, with both companies burning cash and facing extremely high valuations (P/S multiples of 1,110 for RGTI and 335 for QBTS), indicating that widespread commercial viability and profitability are still years away.

Analysis

Quantum computing remains a nascent yet potentially transformative technology, with commercially viable applications still years away and mainstream adoption decades out. Despite this long-term horizon, early movers Rigetti Computing (RGTI) and D-Wave Quantum (QBTS) have seen significant share price appreciation, with RGTI up 156% year-to-date and QBTS surging 293% year-to-date, capping a 3,200% rally over 12 months, largely driven by industry hype.

Rigetti employs a vertically integrated "pick-and-shovel" model, providing quantum infrastructure and fabricating its own chips, akin to Nvidia's role in AI, and benefits from government support, including an $8.6 million DARPA grant in 2020. D-Wave specializes in quantum annealing for optimization, reporting a 42% year-over-year revenue increase to $3.1 million in Q2 from sales to research institutions.

Despite D-Wave's revenue growth, both companies are early-stage and highly speculative, incurring substantial operating losses ($26.5 million for D-Wave) as they burn cash on research. Their current valuations are extremely high, with P/S multiples of 1,110 for Rigetti and 335 for D-Wave, reflecting significant future growth expectations that precede widespread commercial viability and profitability.

Key Decisions for Investors

• Investors should approach quantum computing stocks like Rigetti and D-Wave with extreme caution due to their highly speculative nature, early-stage development, and significant cash burn.
• Given the extremely high price-to-sales multiples (1,110 for RGTI, 335 for QBTS) and years-away commercial viability, immediate investment may be premature.
• It is prudent to add these companies to a watchlist to monitor technological advancements, progress towards commercialization, and improvements in financial fundamentals before considering a position.