The stock market has been abuzz with Rigetti Computing (RGTI)’s 1,700% surge in 2024 and 2025, a meteoric rise that has turned skeptics into believers and drawn comparisons to the dot-com boom. But is this quantum leap rooted in tangible progress, or is it a speculative bubble fueled by hype? Let’s dissect the fundamentals and the frenzy to determine whether RGTI’s valuation is a masterstroke or a mirage.

The Quantum Breakthrough: A Game Changer or a Hype Machine?

Rigetti’s recent announcement of 99.5% median two-qubit gate fidelity on its 36-qubit system is nothing short of revolutionary. This milestone—a 2x reduction in error rates compared to its 84-qubit Ankaa™-3 system—addresses one of quantum computing’s most persistent challenges: error correction. By leveraging modular chiplets (four 9-qubit chips tiled together), Rigetti is demonstrating a scalable path to 100+ qubit systems by year-end.

The company’s proprietary Alternating-Bias Assisted Annealing (ABAA) process, backed by a $5.48 million Air Force grant, further cements its technical edge. These advancements are not just theoretical—they’re attracting partnerships with industry giants like Quanta Computer and academic powerhouses such as Iowa State University and Lawrence Livermore National Laboratory.

Financials: A Tale of Two Realities

While the tech is impressive, the numbers tell a different story. Rigetti’s Q2 2025 results are expected to show $1.87 million in revenue and a $0.04 loss per share, down from $3.09 million in revenue and a $0.09 loss per share in Q2 2024. Over the past twelve months, the company generated $9.2 million in revenue but burned through $138 million in net losses.

The valuation disconnect is staggering: Rigetti trades at 554x its expected 2025 sales, a multiple that assumes quantum computing will achieve commercial viability within the next decade. For context, Tesla (TSLA) trades at ~20x 2025 revenue estimates. This suggests investors are betting on a future where quantum computing becomes a $100 billion industry, not the current reality of a $9.2 million revenue stream.

The Speculative Catalysts: Government Mandates and AI Hype

The Quantum Leadership Act of 2025 and the looming threat of “Q-Day” (when quantum computers could break current encryption) have created a sense of urgency. Federal cybersecurity spending ($7.1 billion from 2025–2035) is primarily directed at cloud providers and cybersecurity firms, but the narrative of quantum as a national security imperative has elevated Rigetti’s profile.

Meanwhile, the AI-quantum crossover narrative is fueling speculation. Analysts like Needham’s N. Quinn Bolton argue that quantum computing could accelerate AI training and optimization, a claim that has resonated with investors. However, this remains a theoretical promise, not a proven application.

Historical Patterns: Earnings and Volatility

Rigetti’s stock has historically underperformed post-earnings, with a 57% chance of a negative one-day return and a median drop of -6.9%. The recent 32% rally following its 99.5% gate fidelity announcement is an exception, but it’s also a warning: the market may be pricing in future milestones rather than current results.

The Verdict: Buy, Hold, or Run?

Fundamental Justification?
– Yes, in the long term. Rigetti’s modular chiplets and error-correction progress are critical for scalable quantum systems. Its partnerships and grants validate its R&D prowess.
– No, in the short term. The company’s financials remain dire, with no path to profitability in sight.

Speculative Risks?
– High. The valuation assumes quantum computing will achieve commercial dominance by 2030, a timeline that hinges on breakthroughs in error correction, software integration, and market adoption.
– Moderate. Government funding and industry momentum provide a safety net, but execution risks remain.

Investment Advice: A High-Risk, High-Reward Play

For long-term investors with a 5–10 year horizon, Rigetti’s quantum roadmap is compelling. The company is a pioneer in full-stack quantum computing, and its modular approach could outpace rivals like IBM and Google. However, the current valuation demands patience and a tolerance for volatility.

Buy if:
– You believe in the transformative potential of quantum computing and can stomach a 5–10 year holding period.
– You’re comfortable with a high-risk position in a speculative sector.

Hold if:
– You’re a value investor seeking near-term profitability.
– You prefer to wait for clearer signs of commercialization (e.g., enterprise contracts or product launches).

Sell if:
– The stock trades above $20 without a major milestone (e.g., 100+ qubit system launch).
– Earnings reports fail to meet revised guidance or show declining cash reserves.

In the end, Rigetti’s stock surge is a mix of justified optimism and speculative fervor. The quantum leap is real, but the landing zone remains uncertain. For those willing to ride the wave, the potential is limitless—but don’t forget to fasten your seatbelt.