Quantum computing stocks have surged since Alphabet (GOOG -0.54%) (GOOGL -0.49%) said it hit a milestone in the cutting-edge technology. The company's Willow quantum chip performed a standard benchmark computation in under five minutes that would take a supercomputer 10 septillion years (a 1 followed by 25 zeros).

Willow also demonstrated that it can reduce errors exponentially as it scales up, solving a challenge that scientists had been working on for nearly 30 years.

Quantum stocks including Rigetti Computing (RGTI -3.59%) soared on the news. And they have remained volatile since then as other tech leaders, like Nvidia CEO Jensen Huang, have said that "very useful" quantum computing is further away than most investors think.

The chart below shows Rigetti's performance over the last six months.

RGTI data by YCharts.

As you can see, it was already building momentum before Google's announcement, but it skyrocketed after that. The stock's plunge in January came after the comments from Huang.

At this point, the stock seems to be in limbo as investors await further clarity on the quantum computing sector and Rigetti. So, is the company a buy? First, let's look at what you need to know about the business.

Image source; Getty Images.

What is Rigetti Computing?

Rigetti's mission is to build the world's most powerful computers using quantum computing. The company developed the world's first multiple-chip quantum process, and it began selling quantum computers to end users in 2023.

Rigetti sees itself competing with high-performance computing (HPC), the kind of supercomputers that are powered by Nvidia chips, though quantum computers have the potential to solve computational problems at a faster speed and lower cost than conventional high-performance computers.

The company is also vertically integrated, owning and operating its own fab, which is a combined laboratory and manufacturing facility. That approach gives it a competitive advantage. Though owning the manufacturing facility tends to come with higher capital expenditures, it does give it more control over its production and costs, and more leverage as it scales up.

The company is still earning only minimal revenue. In the third quarter, it had just $2.4 million in revenue and reported an operating loss of $17.3 million. Rigetti continues to make progress on its technology roadmap and expects to release a system with more than 100 qubits by the end of 2025. (A qubit is a basic unit of quantum information.)

Management hasn't given any long-term guidance, and it's unclear when the company expects to generate material revenue. However, analysts expect revenue to grow from $11 million in 2024 to $15.6 million in 2025, a relatively modest increase for a developmental-stage company.

Is Rigetti Computing a buy?

Following the surge in the stock earlier, it now trades at a sky-high multiple, though perhaps valuation is meaningless for a company on track to earn only $11 million in revenue in 2024.

It currently has a market cap of $3 billion, meaning it trades at a price-to-sales ratio of around 300. A market cap of that size leaves plenty of room for the stock to soar, but it also means it could fall sharply if perceptions change, or if the company's growth or technological progress disappoints. The plunge following the comments from the Nvidia CEO shows how quickly perceptions can change for a high-flying, development-stage group of stocks.

Quantum computing sounds powerful and potentially disruptive. But it's also worth remembering that the success of the technology itself is not a guarantee that the company will be successful since this is already a competitive field with several other start-ups involved, as well as big tech companies like Alphabet.

Rigetti Computing does have some promising technology, but I'd like to see more evidence that it has a viable business before calling the stock a buy. At the current valuation, it looks highly speculative. It could pay off for investors, but I think it's more likely to disappoint in the near to medium term. At this stage, a long-term prediction is just a guess.