Is Rigetti Computing Stock a Buy Now?

Shares of Rigetti Computing (NASDAQ: RGTI) have taken quite a ride, down 61% from their 52-week high yet still up a spectacular 362% over the past year. In some ways, that extreme volatility mirrors the quantum systems the company aims to harness, where particles exist in multiple states, defined by superposition, entanglement, and intrinsic uncertainty.

These aren't just theoretical concepts. Recent advances in quantum technology have paved the way for practical commercial applications that Rigetti is well positioned to capitalize on through its unique full-stack strategy. 2025 is poised to be a pivotal year for the company with several key milestones on the horizon to support a significant growth runway.

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Is the outlook strong enough for investors to look past the recent sell-off and buy Rigetti Computing ahead of a potential rebound? Here's what you need to know.

A quantum computing pioneer

Quantum computing has rapidly emerged as one of the most important themes in the stock market, with tech giants such as Alphabet and Microsoft announcing major investments to support the next generation of computing that will need to be orders of magnitude faster and more power-efficient to tackle highly complex calculations. Industry forecasts estimate the quantum computing market could grow to $90 billion to $170 billion by 2040, a massive opportunity that Rigetti aims to capture -- highlighting the stock's allure as a potential investment.

Rigetti is an industry pioneer, recognized as the first pure-play quantum computing company founded back in 2013. Its vertically integrated model has capabilities than span an in-house Fab-1 foundry for quantum processing unit (QPU) chip design and fabrication to a comprehensive quantum cloud services platform. This approach is seen as accelerating innovation, reducing costs, and positioning the company to lead in bringing quantum computing solutions to market.

Since 2017, Rigetti has offered cloud-based access to its systems, making incremental improvements to performance indicators and validating tech breakthroughs through partnerships with major organizations like NASA, the U.S. Department of Energy, Moody's, and Amazon.

Anticipation is building for the launch of Rigetti's newest system in the second quarter of 2025, featuring a modular architecture that connects multiple QPU chips to create a scalable and exponentially more powerful quantum platform. Management comments suggest this release will mark a milestone in the industry.

Image source: Getty Images.

Mixed financial trends and a pricey valuation

Despite some ambitious plans and impressive technological feats, the actual financial results from Rigetti Computing have left a lot to be desired.

The company's fourth-quarter earnings report for the period ended Dec. 31, 2024, is set to be released on March 5. Wall Street analysts project the company to post a decline in 2024 full-year revenue of -8.4% alongside an earnings per share (EPS) loss of -$0.29. The weak growth reflects the limited commercial momentum as customers are mainly exploring niche quantum applications for testing purposes.

The good news is that the expectation this year looks stronger, with Rigetti forecast to capture new demand as it rolls out expanded cloud access to its Ankaa-3 system and an early boost from its multi-chip system. 2025 revenue is projected to climb by 42% to $15.6 million, which should help modestly narrow the EPS loss to -$0.20.

At the same time, investors will need to balance what remains an eye-watering valuation. With a market capitalization of $2.4 billion, the stock is trading at 154 times the consensus 2025 revenue as a forward price-to-sales (P/S) ratio, an otherwise extreme premium implying the market is already pricing in Rigetti's growth potential far into the future. With many uncertainties, including intense competition from rivals with alternative technologies, the main risk to consider is a scenario in which results begin to disappoint.

Data source: Yahoo! Finance. YOY = year over year.

Proceed with caution

I believe shares of Rigetti Computing are just too expensive to take that quantum leap and buy with conviction. I predict the stock will remain volatile, and the prudent move for investors is to avoid it for now, with a better option for exposure to the themes of quantum computing being the larger, more diversified tech leaders. Ultimately, it will be critical for Rigetti Computing to reaffirm its business model in 2025 and accelerate growth meaningfully. For that reason, you may want to keep this one on your radar.

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John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. Dan Victor has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Moody's. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.