Quantum Dreams Meet Harsh Realities: What's Next for Rigetti Computing?

The Valuation Disconnect

Rigetti Computing (NASDAQ: RGTI) presents an intriguing paradox for investors—impressive technological momentum paired with troubling financial fundamentals. The company’s stock has surged 484% over the past year, riding the wave of quantum computing enthusiasm. Yet beneath this excitement lies a critical question: Is the market pricing in reality, or unrealistic expectations?

Consider the numbers. Rigetti trades at a price-to-sales (P/S) ratio exceeding 1,000—a figure that becomes meaningful symbols of market exuberance when compared to the tech sector’s average P/S of just 9. This means investors are paying more than 100 times what typical tech companies command, for a business generating merely $1.9 million in quarterly revenue.

A Revenue Collapse in Motion

The financial picture grows murkier when examining recent performance. In the third quarter, Rigetti’s revenue declined 18% compared to the prior year. For context, this isn’t a temporary stumble—it reflects the underlying challenge that the company’s core products simply aren’t generating commercial sales at meaningful scales yet.

More troubling is management’s own forecast. During earnings commentary, CEO Subodh Kulkarni acknowledged that achieving Narrow Quantum Advantage—the threshold where commercial viability becomes realistic—remains three to five years away. This transparent admission reveals that the company itself doesn’t anticipate material revenue growth for half a decade or longer. Such timelines are meaningful symbols of just how early-stage this technology remains for commercial deployment.

Rising Costs, Persistent Losses

While revenue stagnates, expenses accelerate in the opposite direction. Operating expenses climbed 13% to approximately $21 million in Q3, creating a widening gap between spending and income. This dynamic suggests Rigetti will operate at losses for many additional years while waiting for meaningful commercial traction.

The path forward isn’t merely unprofitable—it’s uncertain. Even after achieving quantum advantage, there’s no guarantee that commercial success will translate into profitability, particularly given the competitive landscape and substantial investments required.

A Full-Stack Positioning That Hasn’t Yet Delivered

To be fair, Rigetti’s strategic positioning has merit. The company differentiates itself by offering comprehensive quantum solutions—both hardware and software—creating an end-to-end platform. Major cloud providers like Microsoft and Amazon already integrate Rigetti’s quantum services for customer access, and Nvidia collaborates on hybrid computing systems combining classical and quantum processors.

These partnerships represent early validation. The quantum computing market itself could expand to $72 billion by 2035, creating substantial long-term opportunity. Yet opportunity and current execution are worlds apart. These partnerships, however prestigious, have yet to translate into meaningful revenue growth for Rigetti itself.

The Investment Calculus

For equity investors, purchasing Rigetti today requires accepting a troubling set of premises: that the company’s technology will achieve commercial viability on schedule, that revenue will eventually follow, and that current shareholders will ultimately profit despite years of continued losses and dilution.

All of this occurs while paying a valuation that implies certainty of success—a bet that carries extraordinary risk given the early-stage nature of quantum computing commercialization.

A more prudent approach involves monitoring Rigetti’s technical progress and broader quantum industry developments rather than committing capital based on current valuations. When meaningful commercial indicators finally arrive—should they arrive—the market will likely recalibrate dramatically. Until then, the gap between hype and financial reality remains too vast for confident investment decisions.