Rigetti Computing (RGTI +2.59%) has developed some of the most advanced quantum computers available. What sets the company apart is its in-house approach, where it manufactures its quantum chips and creates its programming language, allowing for quicker innovation compared to competitors.
Despite this, Rigetti’s stock has plummeted 74% from its peak last October. Although quantum computing has potential in various fields like science and cryptography, even the best systems suffer from errors that prevent them from addressing real-world challenges. Consequently, Rigetti’s revenue growth has been slower than anticipated, leading to pressure on its stock price.
Challenges in Commercialization
Even the most robust classical computers are limited in their operational capabilities. This limitation requires extensive data centers for advanced technologies such as artificial intelligence, which rely on numerous chips. In contrast, quantum computers utilize superposition to explore multiple solutions simultaneously, making them better suited for tasks that involve heavy data processing.
Superposition allows a quantum bit (qubit) to exist as both 0 and 1 at the same time, unlike classical bits, which are distinctly either 0 or 1. When multiple qubits are in superposition, their data processing capability increases exponentially. However, qubits are highly fragile, typically maintaining superposition only for microseconds and are susceptible to errors. Gate fidelity indicates the precision of quantum operations, where a higher value implies fewer mistakes.
Declining Revenue at Rigetti
Rigetti provides quantum computers directly to businesses and also leases quantum computing capabilities via its cloud platform, including partnerships with companies like Amazon through Amazon Braket, its quantum computing division.
In 2025, Rigetti reported revenue of just $7.1 million, a 34% decrease from the prior year. While this is modest for a company valued at $4.7 billion, there are optimistic projections that revenue could exceed triple to $22.5 million in 2026 (according to Yahoo! Finance). However, this still places the company at a steep valuation.
Potential Future Downturn
Given its $7.1 million revenue and a market cap of $4.7 billion, Rigetti’s stock reflects an outrageous price-to-sales (P/S) ratio of over 600. Using Wall Street’s forecast for 2026 revenue of $22.5 million, the forward P/S ratio is still an alarming 210. For comparison, Nvidia has a P/S ratio of 21.1, and Alphabet is even lower at 9.7.
To align with Nvidia’s P/S ratio, Rigetti’s stock would need to fall by about 96%, dropping from $14.31 to approximately $0.57. While I don’t predict such an extreme fall, I believe a decline of at least 50% over the next 12 months is warranted, potentially reducing the stock price to around $7 or less due to its current high valuation.
