Rigetti Computing Inc (NASDAQ: RGTI) soared as much as 30% on Wednesday after announcing a major technical achievement: the successful demonstration of a 36-qubit modular quantum computer with 99.5% fidelity.
The system, composed of four 9-qubit chiplets, marks a notable reduction in error rates compared to its previous 84-qubit Ankaa-3 chip.
CEO Subodh Kulkarni emphasized the advantages of superconducting qubits, citing gate speeds over 1,000 times faster than competing modalities.
Including today’s surge, Rigetti stock is up some 170% versus its year-to-date low in January.
That said, despite the technical progress, the company’s financials and longer-term viability remain in question.
Why the 36-qubit breakthrough may not mean much for RGTI shares
While the 36-qubit breakthrough is impressive from a research standpoint, it doesn’t immediately translate into commercial viability or revenue growth.
Rigetti remains in the early stages of quantum development, and its systems are still years away from widespread enterprise adoption.
The company’s roadmap includes a 100+ qubit system by late 2025, but quantum advantage — the point where quantum computers outperform classical ones – is still estimated to be four years out.
In the meantime, Rigetti’s revenue remains minimal, and its customer base is largely limited to research institutions and pilot programs.
The 36-qubit milestone is a step forward, but not a game-changer for RGTI shares.
Rigetti stock is currently trading at a premium valuation
Investors should note that Rigetti’s fundamentals continue to paint a concerning picture.
Despite its technological progress, the company reported just $1.5 million in Q1 revenue, down 52% year-over-year.
Operating losses exceeded $21 million, keeping concerns of burn rate alive.
Additionally, Rigetti stock is currently trading at a price-to-sales multiple of nearly 350, far above industry norms, suggesting speculative froth.
With meaningful revenue still three to five years away – and competition from giants like IBM, Google, and Amazon (all of which have much deeper pockets) intensifying, RGTI remains a high-risk bet for investors for the second half of 2025.
Should you invest in Rigetti Computing for the back half of 2025
All in all, the quantum computing firm’s 36-qubit achievement is a technical milestone, but the stock price reaction appears disconnected still from its financial reality.
With declining revenue, steep losses, and a long runway to commercialization, RGTI stock remains a speculative play in a nascent industry.
While the quantum computing market holds promise, Rigetti shares’ current valuation assumes near-flawless execution and rapid adoption — neither of which is guaranteed.
Investors should also note that Rigetti Computing is currently trading handily above even the Street high price target of $16, according to Barchart, further indicating that it may now be the time to cut exposure to the quantum technology firm.
Finally, a lack of dividends keeps RGTI shares unattractive for income investors as well.
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