Rigetti Computing (NASDAQ:RGTI) stock has been on a tear for the ages, fueled by a wave of electrifying enthusiasm for the quantum revolution. Over the past six months, shares have skyrocketed nearly 1,300%, even with a post-CES stumble triggered by Nvidia CEO Jensen Huang’s skepticism about quantum computing’s near-term viability.
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Though RGTI’s prospects are directly tied to the overall fortunes of the quantum industry, there are plenty of reasons related to the company that have pushed the share prices higher. These include technical advancements such as the Ankaa-3 system, which has successfully achieved a 99.5% two-qubit gate fidelity – a critical threshold for quantum computing.
However, while top investor Yiannis Zourmpanos sees promise in Rigetti, he remains cautious, emphasizing that it is still a ‘show me’ story.
“Future gains hinge on successful execution and funding stability in the evolving quantum landscape,” explains Zourmpanos, who sits in the top 1% of TipRanks’ stock pros.
That being said, the investor acknowledges RGTI’s ambitions, spotlighting the company’s revenue projections north of 40% in the current year. These gains are expected to be driven by the launch of 36-qubit and 108-qubit systems, which the company anticipates leading to a 2x decrease in errors.
Zourmpanos is also encouraged by collaborations with major technology players, which could help grease the wheels for the adoption of quantum computing.
“These partnerships boost Rigetti’s tech capabilities and boost its reach within the quantum computing market,” details Zourmpanos, citing the company’s agreements with Amazon, Microsoft, and Nvidia, among others.
However, despite these positives, the investor notes the significant hurdles RGTI faces going forward, particularly challenges of scale. The company has yet to demonstrate its ability to move beyond 84 qubits, and the transition to larger systems presents challenges related to packaging, testing, and maintaining coherence.
Another concern for the investor is the expiration of the National Quantum Initiative Act, which could result in a loss of funding for the company. While RGTI is actively pursuing contracts with the U.S. Department of Defense, Zourmpanos notes that major competitors like Google and IBM are also vying for these opportunities.
“While advancements in qubit fidelity (99.5% gate fidelity on Ankaa-3) and strategic partnerships strengthen its position, scalability risks, reliance on government contracts, and competition from IBM and Google remain key hurdles,” concludes Zourmpanos, who rates RGTI shares a Hold (i.e., Neutral). (To watch Zourmpanos’ track record, click here)
Wall Street, however, remains smitten with RGTI. With 4 Buy ratings and no Sells, RGTI enjoys a Strong Buy consensus rating. Its 12-month average price target of $15.67 implies ~33% upside potential for the year ahead. (See RGTI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
