Rigetti Computing Faces Valuation Concerns Amid Quantum Growth

Rigetti's valuation raises eyebrows. As shares surge 82% over a month, challenges loom in the competitive quantum space.

Date: 13-02-2025

AI Rating: 5

Valuation Concerns and Market Position: Rigetti Computing (RGTI) is currently perceived as overvalued, indicated by its Value Score of F. The forward 12-month price/sales ratio stands at 116.46X, substantially higher than its median of 94.39X and the Computer and Technology sector benchmark of 6.53X. This stark contrast suggests a potential for stock price adjustment if earnings do not align with these expectations.

Recent Performance: RGTI shares have demonstrated significant growth, climbing by 82.2% in the past month. This performance starkly contrasts with the Internet - Software industry's 3.8% return and the broader Computer & Technology sector's 2.6% advancement. However, despite this impressive trajectory, the elevated valuation raises concerns regarding sustainability.

Future Growth and Partnerships: The report notes that RGTI is well-positioned for future growth, particularly in quantum computing advancements, as it successfully demonstrated 9-qubit chips and is preparing to launch larger systems by 2025. Moreover, partnerships with major players like Amazon (AMZN) and Microsoft (MSFT) signify a strong collaborative push into the market, enhancing its innovation capabilities. The anticipated 40.29% year-over-year revenue growth for 2025 further suggests potential positive movement for stock prices.

Earnings Estimates: The Zacks Consensus Estimate for RGTI indicates revenues of $15.32 million for 2025, suggesting an increase from prior performance. However, the consensus mark for losses per share remains at 28 cents, which implies a continuing trend of losses, thus contributing towards a cautious outlook.

Challenges Ahead: Despite these advancements, RGTI faces macroeconomic uncertainties and fierce competition in the quantum computing arena. Noteworthy industry leaders have expressed skepticism about the near-term viability of quantum advancements, which may deter investor confidence and drive stock prices downward.

Stocks: RGTI AMZN MSFT QBTS