2 Popular Quantum Computing Stocks to Sell Before They Fall 41% and 54%, According to Select Wall Street Analysts

Quantum computing stocks Rigetti Computing and D-Wave Quantum have surged over 2,500% in the past year, yet analysts project significant downside, citing extreme valuations despite their differing technological approaches. Rigetti, focusing on gate-based systems, faces a projected 54% decline from its 1,253x sales multiple and Q2 revenue drop, while D-Wave, with its more commercially viable annealing systems, is forecast to fall 41% from its 384x sales multiple, indicating broad concerns over the sector's current market pricing relative to its long-term commercialization horizon.

Analysis

Rigetti Computing (RGTI) and D-Wave Quantum (QBTS) have seen remarkable stock surges of 2,570% and 2,840% respectively over the past year, yet Wall Street analysts, including Cantor Fitzgerald's Troy Jensen and Canaccord's Kingsley Crane, deem them "wildly overvalued." Analysts project significant downside, with RGTI facing a 54% implied decline to a $18 target from its current $39, and QBTS a 41% implied decline to a $20 target from $34.

Both companies exhibit challenging financial fundamentals relative to their market capitalization. Rigetti reported a 42% Q2 sales decline to $1.8 million and a tripled GAAP net loss of $40 million, trading at an extraordinary 1,253 times sales. D-Wave, despite a 42% revenue increase to $3.1 billion, still trades at 384 times sales, which is noted as being twice as expensive as the S&P 500's most richly valued stock.

Rigetti's gate-based systems, while holding long-term promise, are considered to have limited immediate commercial value, with practical applications at least five years out. Conversely, D-Wave's annealing systems offer more current commercial utility for optimization problems. Both firms have bolstered their balance sheets with substantial cash reserves from recent stock issuances, with RGTI holding $425 million and QBTS $819 million, despite year-to-date operational cash consumption of $30 million and $35 million respectively.

Key Decisions for Investors

• Investors should exercise extreme caution regarding Rigetti Computing (RGTI) and D-Wave Quantum (QBTS) given the significant analyst-projected downsides of 54% and 41% respectively, stemming from their current "wildly overvalued" status.
• Monitor fundamental performance closely, as Rigetti's declining sales and D-Wave's still-high valuation multiples (1,253x and 384x sales) suggest a disconnect between market price and current commercial viability.
• Consider the long-term horizon for gate-based quantum computing and the more immediate, albeit niche, utility of annealing systems, but remain aware that current valuations appear to price in substantial future growth far beyond present financial realities.