By Mackenzie Tatananni

Rigetti Computing's approach to quantum development says a lot about the company. It is grounded solidly in scientific research and iteration, and, most importantly, doesn't want to get ahead of itself.

The company's pragmatic stance draws a marked contrast to some of the sector's more aspirational players, which raises the question: Is quantum computing a thing of the future, or will commercially viable quantum emerge in as little as five years?

Rigetti CEO Subodh Kulkarni subscribes to the belief that slow and steady wins the race.

"Our peer companies are a lot more optimistic and aggressive with their forecasts," Kulkarni said in an interview with Barron's. "We share their enthusiasm for the long-term potential. But when it comes to the next three to five years, we are of a more conservative view."

Rigetti's quantum architecture uses a superconducting gate-based framework, the same methodology embraced by International Business Machines, Alphabet-owned Google, and Amazon.com.

"We believe gate-based quantum is the broadest approach to building computing applications," Kulkarni explained. Annealing quantum -- the approach favored by D-Wave Quantum -- "has shown some interesting data" but has more specialized applications, which limits it to a niche market, in his view.

While gate-based quantum has broader applications, annealing quantum is in a league of its own when it comes to optimization problems. D-Wave CEO Alan Baratz shared several use cases with Barron's in an interview last month, showing how customers such as NTT Docomo and Pattison Food Group use the technology to refine and improve their businesses.

While Rigetti may be one of several companies taking a gate-based approach, its identity sets it apart. Unlike competitors who flaunt extensive client rosters, Rigetti is adamant about its focus on research, including efforts supported by the U.S. government.

Since 2022, the company has taken part in the Defense Advanced Research Projects Agency's Quantum Benchmark Initiative program, which assesses and validates the progress of quantum-computing companies.

"Our view is still very much in the R&D stage," Kulkarni said. In spite of this, Rigetti stock has experienced a dazzling ascent since the end of 2024. Shares exploded between between December and January, climbing to an all-time high of $21.42 on Jan. 5, 2025.

While they have since fallen from these levels, closing down 3.8% at $8.15 on Friday and declining nearly 47% this year, they remain up 433% over the past 12 months.

Kulkarni, for one, doesn't focus on the stock moves. "I can get dizzy looking at the volatility of our stock price," he said, laughing.

He has a point. The selloff succeeding Nvidia GTC's Quantum Day proved just how turbulent the stocks can be, and how little the nuances of quantum development factor into decisions of whether to invest.

Shares of pure-plays including Rigetti tumbled after last week's event, which saw Nvidia CEO Jensen Huang join executives from several quantum-computing companies to discuss future visions for the technology.

Huang appeared to be saving face after saying in January that "very useful quantum computers" would be decades away. However, his newfound support wasn't as much of a pivot as it seemed.

Nvidia unveiled its inaugural Quantum Day roughly a week after the controversial remarks. Then, on March 18, the company revealed it would be building a quantum-computing research center, a plan that was certainly set in motion long before Huang's controversial comments.

While the Nvidia CEO extended an apology to the sector, he didn't hesitate to speak his mind, expressing his surprise that public quantum-computing companies even existed.

This only underscores the widespread misunderstanding of the technology. While some investors see quantum as a speculative bet, proponents argue that it isn't a question of if, but when quantum will fundamentally reshape entire industries, from pharmacology to banking.

However, it has a ways to go. "Despite what some other companies may be saying, the market is going to be relatively modest, like a couple billion dollars a year" in the next four to five years, Kulkarni said. He believes growth initially will be driven by purchases from government-funded national labs and academic researchers.

The CEO expects quantum computing to grow into an industry worth hundreds of billions of dollars per year over the next 15 years. Until then, he has some advice for investors.

"You should only be trading in the stocks if you have a long-term horizon and believe in the technology," Kulkarni said. "You shouldn't be dabbling in them to make a quick buck, because of the volatility in stock prices."

Besides, viewing quantum as nothing more than a way to turn a profit is reductive, seeing as the technology has the potential to revolutionize entire sectors.

Consulting firm McKinsey & Co. sees a market size for quantum computing of anywhere from $45 billion to $131 billion by 2040. Boston Consulting Group forecasts an even higher range, between $90 billion and $170 billion.

"Where quantum computing will start shining, at first, is that it will coexist with GPUs in data centers, and it's going to be a hybrid model," Kulkarni said. "We are excited about how big the market potential could be."

Write to Mackenzie Tatananni at mackenzie.tatananni@barrons.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

March 29, 2025 09:29 ET (13:29 GMT)

Copyright (c) 2025 Dow Jones & Company, Inc.