Rigetti Targets Commercial Traction With QPU-as-a-Service Strategy

Rigetti Computing (RGTI) is shifting to a service-based model, highlighted by the launch of its 84-qubit Ankaa-2 system and its availability on AWS Braket, allowing customers to access its quantum computing power via the cloud. The Ankaa-2 boasts improved performance and fidelity, positioning Rigetti to monetize quantum usage on a consumption basis, similar to competitors IonQ and D-Wave, although RGTI shares have declined 25.7% year-to-date, and the stock currently carries a Zacks Rank #4 (Sell).

Analysis

Rigetti Computing (RGTI) is strategically pivoting towards a QPU-as-a-Service model to enhance commercial viability, leveraging its new 84-qubit Ankaa-2 system, which was launched in December 2023 and made available on AWS Braket in August 2024. This system represents a significant technological advancement for Rigetti, offering a 2.5x performance improvement over its predecessor and an approximate 98% median two-qubit fidelity, positioning it as the company's most commercially viable QPU. This cloud-first approach aims to monetize quantum usage on a consumption basis, thereby addressing near-term revenue challenges while demonstrating the practical value of its superconducting quantum technology to a broader audience including enterprise, government, and academic sectors. This strategy aligns Rigetti with peers like IonQ (IONQ), which has established a strong commercial presence with its trapped-ion systems on major cloud platforms and a focus on application-layer solutions, and D-Wave (QBTS), which successfully commercializes its quantum annealing technology via its Leap platform for specific enterprise use cases. Despite these strategic developments, RGTI's shares have significantly underperformed, declining 25.7% year-to-date against the industry's 12.9% growth. The stock trades at a high price-to-book ratio of 15.73 and holds a Zacks Value Score of F, alongside a Zacks Rank #4 (Sell), although the Zacks Consensus Estimate for its 2025 earnings suggests a substantial 86.1% year-over-year increase.

Key Decisions for Investors

• Investors should acknowledge Rigetti's promising technological advancements with Ankaa-2 and its strategic shift to a QPU-as-a-Service model, but temper expectations given the stock's significant year-to-date underperformance of -25.7% and its current Zacks Rank #4 (Sell).
• Consider the high valuation, indicated by a price-to-book ratio of 15.73, and the competitive landscape where peers like IonQ and D-Wave have more established cloud offerings, suggesting a cautious approach until clear monetization of the Ankaa-2 system is demonstrated.
• Monitor the adoption rate of Ankaa-2 on AWS Braket and subsequent revenue generation, as these will be critical indicators to validate the projected 86.1% earnings growth for 2025 and assess the long-term viability of Rigetti's commercial strategy.