Rigetti Computing RGTI shares are currently overvalued, as suggested by its Value Score of F. 

In terms of the forward 12-month price/sales (P/S), RGTI is trading at 116.46X, significantly higher than its median of 94.39X and the Zacks Computer and Technology sector’s 6.53X.

Price/Sales (F12M)

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RGTI’s shares have surged 82.2% over the past month compared with the Zacks  Internet - Software industry’s return of 3.8% and the broader Zacks Computer & Technology sector’s growth of 2.6%. 

RGTI Beats Sector, Industry

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RGTI’s shares have outperformed its peer, D-WAVE QUANTUM QBTS, which has gained 392% over the past month.

The outperformance can be attributed to RGTI’s expanding clientele and its growing influence in the quantum computing space.

With an impressive share price performance but at such a high valuation, how should investors approach RGTI stock? Let investigate.

RGTI’s Quantum Advances Position it for Future Growth

RGTI’s expanding portfolio in the quantum computing space has been noteworthy. In the third quarter of 2024, Rigetti successfully demonstrated 9-qubit chips with 99.4% median 2-qubit gate fidelity and announced plans to release a 36-qubit system by mid-2025. These advancements in quantum hardware are vital for RGTI’s future growth.

In December 2024, RGTI launched its 84-qubit Ankaa-3 quantum computer, featuring a hardware redesign that boosts performance and scalability. With a median 99% iSWAP gate fidelity and 99.5% fSim fidelity, it supports advanced algorithms and is now available on Rigetti QCS. 

The system will expand to Amazon AMZN Braket and Microsoft MSFT Azure in early 2025, allowing users to leverage Amazon and Microsoft platforms for quantum computing innovation.

RGTI made advancements in quantum computing, including the development of its multi-chip architecture for scaling up qubit systems. This positions Rigetti at the forefront of the industry and enhances its capabilities in quantum computing.

As the quantum computing market continues to evolve, RGTI is poised to benefit from its growth. Per a Grand View Research report, the quantum computing market is expected to witness a CAGR of 20.1% from 2024 to 2030.

RGTI’s Key Partnerships Drive Quantum Computing Growth

RGTI’s partnership with Riverlane, NVIDIA and Quantum Machines has been a major growth driver for its success, positioning the company as a key player in the rapidly evolving quantum computing space.

In December 2024, Rigetti announced the successful application of artificial intelligence, in collaboration with Quantum Machines, to automate the calibration of its 9-qubit Novera QPU. This was achieved by leveraging NVIDIA DGX Quantum, enabling high gate fidelities and marking a significant advancement in quantum computing operations.

Rigetti’s partnership with Riverlane to develop quantum error correction technology has been noteworthy.  In October, Rigetti, in collaboration with Riverlane, successfully demonstrated real-time and low-latency quantum error correction on Rigetti’s 84-qubit Ankaa-2 system. This system achieves faster decoding times to avoid backlog issues and ensure fault tolerance in quantum computing.

Rigetti’s collaborations with academic and industry leaders, such as the UK’s National Quantum Computing Centre and the Israeli Quantum Computing Center, provide access to world-class research facilities and a broad network of expertise. 

These partnerships enhance Rigetti’s technological capabilities and position the company as a key player in the global quantum computing ecosystem.

RGTI’s Earnings Estimate Shows Upward Trend

The Zacks Consensus Estimate for 2025 revenues is currently pegged at $15.32 million, indicating an increase of 40.29% year over year.

The consensus mark for 2025 loss per share is pegged at 28 cents, unchanged in the past 30 days. The figure indicates a year-over-year increase of 17.65%.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Rigetti Suffers From Quantum Market Challenges

Rigetti’s advancements in the quantum computing space are continuously benefiting the company’s top-line growth.

However, challenging macroeconomic uncertainties and intense competition in the rapidly evolving and highly competitive quantum computing market have negatively impacted the company’s top-line growth. 

These challenges are further compounded by recent remarks from influential industry leaders. 

Meta CEO Mark Zuckerberg and NVIDIA CEO Jensen Huang have both expressed doubts about the near-term practical applications of quantum computing, suggesting it may take decades to become commercially viable. The concerns raised by these high-profile CEOs’ have contributed to a market downturn affecting Rigetti in the quantum computing industry.

Conclusion

Stretched valuation, along with stiff competition, is expected to drag down RGTI shares in the near term.

Currently, Rigetti carries a Zacks Rank #3 (Hold), implying that investors should wait for a better entry point to accumulate the stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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