Where Will Rigetti Computing Be in Three Years?

The future of Rigetti Computing remains uncertain, especially given its past challenges. The company, which specializes in quantum computing, has much to prove in the coming years.

Rigetti Computing became publicly traded on March 2, 2022, through a merger with a special purpose acquisition company (SPAC). Initially, its stock opened at $9.75 but fell to an all-time low of $0.38 on May 3, 2023. This decline was fueled by unmet pre-merger expectations, considerable losses, and the unexpected resignation of founder Chad Rigetti in December 2022. Additionally, rising interest rates led many investors to steer clear of speculative stocks, compounding the company’s difficulties.

However, as of now, Rigetti's stock is priced around $13.50. A $10,000 investment at its lowest point would have increased significantly to approximately $333,260 within two years. Exploring the reasons behind Rigetti's stock recovery helps us understand its potential trajectory moving forward.

Why Did Rigetti Computing Impress the Market?

Where traditional computers rely on binary bits — zeros and ones — quantum computers utilize quantum bits or qubits that can represent both zeros and ones simultaneously. This unique feature allows quantum computers to process vast amounts of data much more efficiently than conventional supercomputers. In some cases, even mid-range quantum computers can outperform the most advanced digital systems.

Nevertheless, current quantum computers tend to be larger, more costly, and have higher error rates than their traditional counterparts. As the technology is still in its infancy, most applications are focused on niche research within universities and governmental organizations. However, as quantum systems evolve to become more compact, affordable, and reliable, their adoption in mainstream sectors like analytics and artificial intelligence could expand.

Rigetti stands out in this space by designing and manufacturing its own quantum processing units (QPUs) and offering both modular and nonmodular quantum computing systems. The company also provides a cloud infrastructure for developing quantum applications, making it a comprehensive player in the quantum computing landscape.

In December 2022, Rigetti launched its Novera QPU, a commercially viable 9-qubit quantum computer priced at $900,000. The launch attracted significant orders from noteworthy clients including the Superconducting Quantum Materials and Systems Center (SQMS), the Air Force Research Lab (AFRL), and Horizon Quantum Computing in Singapore. Furthermore, Rigetti introduced its 84-qubit Ankaa-3 quantum computing system, which boasts over 99% error detection capability, to enhance its cloud platform.

The introduction of these products indicates that Rigetti can continue to grow even amid leadership changes. While Chad Rigetti remains focused on product development, Dr. Subodh Kulkarni, who previously held a leadership position at CyberOptics, has taken over as CEO.

Future Plans for Rigetti Computing

Looking ahead, Rigetti aims to launch a new modular quantum computing system this year, linking four 9-qubit chips to create a 36-qubit setup with a median gate fidelity of 99.5%. By the end of 2026, the company plans to deploy a nonmodular system exceeding 100 qubits, also achieving a median gate fidelity of 99.5%. In a subsequent phase, Rigetti aims to introduce a much more powerful 336-qubit system.

Forecasts suggest that Rigetti will earn only $11 million in revenue in 2024, although that number is expected to increase to $16 million in 2025, and then reach $35 million by 2026 as the company expands its commercial system shipments and enhances its cloud service offerings. While these growth figures appear commendable, consider that Rigetti currently has an enterprise value of $3.7 billion, trading at 105 times its projected sales for 2026. This scenario suggests that the company is unlikely to achieve profitability in the near term.

Dr. Kulkarni has raised cautious notes about immediate market expectations regarding quantum computing. Notably, Nvidia CEO Jensen Huang recently stated that practical quantum computers may still be decades away.

However, projections from Fortune Business Insights indicate that the quantum computing market could grow at a compound annual growth rate (CAGR) of 34.8% from 2024 to 2032. If Rigetti can align its growth with market trends, it might generate around $120 million in revenue by the end of that period. Yet, it is important to note that Rigetti's current valuation already far exceeds these optimistic forecasts.

What Lies Ahead for Rigetti in the Next Three Years?

Overall, Rigetti is likely to experience a tumultuous and news-sensitive stock trajectory in the coming three years. Its shares could face substantial declines, potentially dropping more than 90% before achieving a reasonable valuation based on its growth potential. Consequently, it appears unlikely that Rigetti will outperform the broader market by 2028. The company may instead experience a loss of investor interest as its stock valuations normalize.

Note: This article reflects the author's views and does not represent investment advice.

Rigetti, Quantum, Stocks