Prediction: Rigetti Computing Stock Is Going to Sink After Nov. 10
Quantum computers have the potential to outperform traditional computers in data-intensive areas like science and cryptography, because they can use a concept called superposition to simulate several solutions to a given problem at the same time. However, even the most sophisticated quantum computers available today still make too many errors to solve real-world problems.
As one of the industry leaders, Rigetti Computing (RGTI -5.16%) is making strides, but the company is burning through a ton of cash because it’s investing aggressively in research and development while bringing in minimal revenue. That isn’t a very attractive proposition for investors, which explains why Rigetti stock has plummeted by 80% from its all-time high.
However, the stock continues to trade at a sky-high valuation, which leaves the door open to more potential downside. Rigetti is scheduled to release its operating results for the third quarter of 2026 (ended Sept. 30) after the market closes on Nov. 10, and here’s why I predict they could be a negative catalyst for the stock.
Image source: Getty Images.
Commercializing quantum computers could be a very long journey
Rigetti has a massive advantage over many other companies in the quantum computing space because it built its own supply chain, which means it can bring new systems to market much faster. It has its own fabrication facility to produce chips, its own quantum programming language, and even its own cloud computing platform where it rents quantum capacity to enterprises for a fee.
Rigetti developed one of the industry’s largest multichip quantum computers called Cepheus-1-108Q. It has a single-qubit gate fidelity of 99.9%, meaning it typically makes one error for every 1,000 quantum operations. However, its 2-qubit gate fidelity is just 99.1%, implying nine errors for every 1,000 operations. Qubits are highly sensitive to interference, so getting two of them to work together in harmony is one of the industry’s biggest challenges.
Solving important real-world problems might require an error rate of one in a billion, so although Cepheus-1-108Q is a great system by current standards, it still isn’t very useful. Rigetti thinks it will take another three years to achieve a 2-qubit gate fidelity of 99.9%, because it will require better chip designs, materials, and production processes. Even then, it probably won’t be solving humanity’s most pressing issues.
Ark Investment Management, which was founded by seasoned tech investor Cathie Wood, predicts the industry could be up to 40 years away from delivering truly disruptive quantum computers. Bigger financial investments and unexpected breakthroughs could accelerate that timeline, but companies like Rigetti are facing a long journey.
RGTI – Rigetti Computing
$10.67-$0.58 (-5.16%)
NASDAQ · As of 4:00 PM ET 11/02/26
Rigetti’s third-quarter revenue likely suffered a sequential drop
Rigetti generated $5.1 million in revenue during the second quarter of 2026 (ended June 30). Although it was an eye-popping 185% increase from the year-ago period, it was a tiny amount of money for a company that currently has a market capitalization of $3.7 billion.
According to Wall Street’s consensus estimate (provided by Yahoo! Finance), Rigetti might have generated just $3.7 million in revenue during the third quarter. It would be an 88% increase year over year, but it would represent a sequential decline (compared to the second quarter).
The bottom line might be an even bigger concern for shareholders. Rigetti’s second-quarter operating expenses of $30.2 million eclipsed its revenue, contributing to a $52.6 million net loss. The company might have been even deeper in the red during the third quarter if its revenue declined sequentially, especially if overall expenses increased. We will officially find out on Nov. 10.
Rigetti had $541 million in cash and cash equivalents on hand as of June 30, so it can sustain its losses for the foreseeable future. However, given how long it might take to develop truly useful quantum computers, the company might have to tap investors for more money in the future.
Rigetti’s sky-high valuation could result in sharp losses
Based on Rigetti’s modest revenue and its sizable market cap, its stock is trading at a price-to-sales (P/S) ratio of 278, making it a whopping 44 times as expensive as the Nasdaq-100 index. In other words, it’s heavily overvalued compared to a group of America’s highest quality technology companies.
Even if we value Rigetti stock based on Wall Street’s 2027 revenue estimate of $43.9 million, it still has a hefty forward P/S ratio of 85.
RGTI PS Ratio data by YCharts
Even if Rigetti stock plummets by 90% from last Friday’s closing price of $11.25, it will still be more expensive than the Nasdaq-100 by this metric. I’m not predicting a decline of that magnitude, because many investors are likely to hold quantum stocks because of the technology’s significant long-term potential.
Nevertheless, there could be significant downside ahead, and recent history suggests there won’t be anything in Rigetti’s upcoming third-quarter report on Nov. 10 capable of preventing it. In fact, a disappointing set of operating results could actually accelerate the losses for shareholders.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.