The quantum computing sector has long been a magnet for speculative bets, but Rigetti Computing (NASDAQ: RGTI) has emerged as a focal point of both optimism and skepticism. In 2025, the stock’s volatility—swinging from a 30% surge following a milestone in gate fidelity to sharp corrections amid revenue declines—has left investors grappling with a critical question: Is Rigetti’s recent turbulence a chance to buy into a transformative technology at a discount, or a warning sign that its sky-high valuation remains disconnected from reality?

The Catalysts: Technical Milestones and Strategic Moves

Rigetti’s recent 4.93% rally on July 14, 2025, was fueled by a 99.5% median two-qubit gate fidelity on its modular 36-qubit system. This achievement, a 1.5% jump from its 84-qubit Ankaa system, is a critical step toward practical quantum computing. Gate fidelity—the accuracy of quantum operations—must exceed 99% to enable error correction, a prerequisite for solving real-world problems. Rigetti’s modular architecture, which tiles smaller chips into larger systems, also offers scalability advantages over competitors like ion-trap-based firms.

Strategic partnerships have further bolstered confidence. The $100 million manufacturing deal with Quanta, a Fortune 500 server giant, and a $35 million equity investment from the same partner, signal institutional validation. Meanwhile, government contracts, including the DARPA QBI program, provide a stable revenue stream amid private-sector commercialization delays.

The Risks: Valuation vs. Execution

Despite these positives, Rigetti’s financials tell a different story. Q1 2025 revenue fell 52% year-over-year to $1.47 million, while operating expenses ballooned to $68.5 million. Its price-to-sales ratio of 397.75—a 347x multiple on expected 2025 sales of $14 million—reflects a market betting on future potential rather than current profitability. This is speculative by any measure, especially for a company yet to demonstrate “quantum advantage” (a clear edge over classical computing).

CEO Subodh Kulkarni’s roadmap, while ambitious, hinges on unproven scaling. The planned 100+ qubit system by year-end and a 336-qubit Lyra processor by 2026 are bold, but competitors like IBM and Google are also racing toward similar thresholds. Moreover, superconducting qubits—Rigetti’s core technology—require extreme cooling and complex infrastructure, raising questions about cost-effectiveness for mass adoption.

Investor Sentiment: A Double-Edged Sword

The quantum computing sector’s broader rally—exemplified by Quantum Computing Inc.’s 155% surge in late 2024—has created a self-fulfilling prophecy. As more companies gain traction in public indices and secure private funding, investor sentiment turns bullish, even for firms with no near-term revenue. Rigetti’s stock has benefited from this tailwind, but the same dynamics could reverse if commercialization timelines slip or tech giants like Microsoft disrupt the market.

Analysts remain divided. Cantor Fitzgerald’s “Overweight” rating and $16.57 target price (vs. $11.86 as of June 30) suggest confidence in Rigetti’s technical execution. Yet others caution that the company’s reliance on government contracts and partnerships—while valuable—may limit its ability to capture mainstream enterprise markets.

Valuation Sustainability: A High-Stakes Gamble

Rigetti’s market cap of $2.38 billion—over 170x 2025 expected sales—rests on the assumption that quantum computing will transition from niche research to commercial reality within a few years. This is plausible: Market forecasts project a 28.5–28.7% CAGR from 2025 to 2035. However, the path to profitability is fraught.

For Rigetti to justify its valuation, it must:
1. Deliver on its roadmap: Achieve 99.5% fidelity at scale, launch the 100+ qubit system, and demonstrate quantum advantage in a commercial application.
2. Scale revenue: Grow from $14 million in 2025 to hundreds of millions by the late 2020s. This requires winning enterprise clients, which currently rely on cloud-based quantum services from IBM and Google.
3. Control costs: Reduce operational losses from $70 million in 2025 to break-even by the mid-2030s.

Failure on any of these fronts could trigger a collapse in valuation, as seen in past tech bubbles.

Investment Thesis: Balancing Potential and Risk

Rigetti’s volatility presents a paradox. On one hand, its technical progress and strategic alliances position it as a leader in a high-growth sector. On the other, its financials and execution risks make it a high-stakes bet.

For aggressive investors: Rigetti’s current price near $12 (as of mid-July 2025) offers a potential entry point if the company can maintain its momentum. A successful 36-qubit launch and Quanta partnership could drive the stock toward $16.57, Cantor Fitzgerald’s target. However, patience is key—this is a long-term play.

For risk-averse investors: The valuation remains precarious. Until Rigetti achieves commercial quantum advantage and significantly increases revenue, the stock is best suited for those with a high-risk tolerance and a multi-year time horizon.

Conclusion: A Mirage or a Moonshot?

Rigetti Computing sits at the intersection of cutting-edge science and speculative finance. Its recent volatility reflects the sector’s inherent uncertainty: a mix of technological promise and unproven commercial viability. While the company’s roadmap is credible, its valuation demands that it outexecute competitors and avoid the pitfalls of overhyped tech stocks.

For investors, the question is not whether quantum computing will revolutionize industries—but whether Rigetti can navigate the next 3–5 years without burning through its capital or losing its edge. Until then, the stock remains a bet on the future, with all the risks and rewards that entails.

Final Advice: Consider a small, strategic position in Rigetti for those comfortable with high volatility and a long-term horizon. Diversify across the quantum sector and pair with more stable tech holdings to mitigate risk.