RGTI Jumps 15% Post DARPA Quantum Project Win: Time to Buy the Stock?

Rigetti Computing RGTI shares have rallied 15.2% since the company announced that it was selected to participate in the Defense Advanced Research Projects Agency (“DARPA”) Quantum Benchmarking Initiative on April 03. This program aims to evaluate whether quantum computing technologies can achieve a utility-scale performance by 2033.Rigetti’s selection as one of 15 finalists in DARPA’s Quantum Benchmarking program, alongside giants like IBM and Hewlett Packard Enterprise, underscores its rising influence in quantum computing. This recognition validates its technological capabilities and enhances its credibility. Being chosen by DARPA can unlock future contracts, collaborations and funding, accelerating Rigetti’s R&D and commercialization efforts.RGTI Shares Outperform Sector, Industry & PeersRigetti’s shares have outperformed the Zacks Computer & Technology sector and its industry peers, which include Affirm AFRM, nCino NCNO and Atlassian TEAM, in the year-to-date period.The RGTI stock has jumped 16.7% over the trailing month, while AFRM and TEAM shares have plunged 5.3% and 6.5%, respectively. NCNO shares have lost 14.1% during the same period. The broader sector has declined 13.6% over the same timeframe.RGTI has also outperformed the Zacks Internet - Software industry, which has fallen 13.8% over the trailing month. Image Source: Zacks Investment Research Let us delve deeper and figure out the best course of action for your portfolio regarding the RGTI stock.Developments Propelling Rigetti’s GrowthAdvancements in Quantum Processor Technology: In December 2024, RGTI launched its 84-qubit Ankaa-3 quantum processing unit (QPU), marking a substantial enhancement in its hardware capabilities. The Ankaa-3 system features a comprehensive hardware redesign aimed at reducing error rates and improving performance. Notably, it achieved a 99% median iSWAP gate fidelity and demonstrated a 99.5% median fidelity with fSim gates. These advancements underscore Rigetti's commitment to advancing quantum computing technology and position the company to scale to systems with more than 100 qubits by the end of 2025.As the quantum computing market continues to evolve, RGTI is poised to benefit. Per a Grand View Research report, the global quantum computing market is expected to witness a CAGR of 20.5% from 2025 to 2030.Partnership With Quanta Computer: In February 2025, Rigetti entered a collaboration with Quanta Computer Inc. — a Taiwan-based global leader in computer server manufacturing. Both companies committed to investing more than $100 million each over five years to accelerate the development and commercialization of superconducting quantum computing technologies.Additionally, Quanta agreed to invest $35 million in Rigetti through a stock purchase, pending regulatory approval. This partnership aims to leverage RGTI's expertise in superconducting quantum technology and Quanta's manufacturing capabilities to advance the quantum computing industry.AI-Powered Quantum Processor Calibration: In December 2024, Rigetti, in partnership with Quantum Machines, Quantum Elements and Qruise, automated the calibration of a 9-qubit Rigetti Novera QPU using artificial intelligence (AI). This achievement was part of the "AI for Quantum Calibration Challenge" hosted at the Israeli Quantum Computing Center.Quantum Elements' software achieved 99.9% single-qubit gate fidelity and 98.5% two-qubit gate fidelity, whereas Qruise's tools fine-tuned all nine qubits simultaneously, reducing calibration times. This collaboration demonstrates the potential of AI in streamlining quantum processor calibration, addressing a critical bottleneck in scaling quantum systems.RGTI’s Sales & EPS GrowthRigetti is poised for a strong growth phase in 2025, with sales projected to rise 36.4% and an even sharper acceleration of 153.3% in 2026. On the profitability front, EPS is expected to turn positive, with a 44.4% increase in 2025, followed by a 15% rise in 2026, suggesting improved operational efficiency and better cost management.Find the latest EPS estimates and surprises on Zacks Earnings Calendar. Image Source: Zacks Investment Research Key Challenge for RigettiDependence on Limited Supplier Base for Critical Components: Rigetti relies on a limited number of specialized suppliers for critical quantum hardware components, such as superconducting quantum processors and cryogenic cooling systems. Since 2024, there have been fewer than 10 specialized quantum computing component manufacturers globally, with only 2-3 manufacturers producing cryogenic cooling systems.This high supply concentration poses risks related to supply-chain disruptions and the bargaining power of suppliers. Additionally, the procurement of advanced materials, such as rare earth elements essential for quantum hardware, has become increasingly challenging, with costs surging 67% since 2022. These supply-chain constraints could impact Rigetti's ability to scale its operations and meet its technological development timelines.RGTI Shares Look OvervaluedRigetti’s stock is not so cheap, as suggested by the Value Score of F.RGTI is currently trading at a price-to-book (P/B) ratio of 21.2X, which is more than four times higher than the industry average of 4.59X. This can mean that investors are valuing the company far above the worth of its actual assets, largely because of its potential in quantum computing rather than its current financial performance. Such a high P/B ratio suggests that the stock is priced for significant growth and innovation, but it also makes it highly sensitive to execution risks or negative news.Price-to-Book Ratio Image Source: Zacks Investment Research How to Play Rigetti’s Stock Now?Rigetti stands out as a high-potential player in the quantum computing space, backed by strong momentum from collaborations and technological breakthroughs. While the company faces near-term challenges like high R&D costs, supply-chain risks and an elevated valuation, the strong forward growth projections and robust financial backing position it well for success.With a Zacks Rank of #2 (Buy), Rigetti presents an attractive investment opportunity for those seeking exposure to next-generation technologies. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.7 Best Stocks for the Next 30 DaysJust released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers "Most Likely for Early Price Pops."Since 1988, the full list has beaten the market more than 2X over with an average gain of +23.9% per year. So be sure to give these hand picked 7 your immediate attention. See them now >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Atlassian Corporation PLC (TEAM): Free Stock Analysis Report nCino Inc. (NCNO): Free Stock Analysis Report Affirm Holdings, Inc. (AFRM): Free Stock Analysis Report Rigetti Computing, Inc. (RGTI): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks