Quantum Dreams & Empty Pockets

Now, I’ve seen a good many schemes come and go in my time – land bubbles, gold rushes, even a fellow once tried to sell me swampland in Florida. But this here business of quantum computing… well, it’s a different breed of speculation altogether. Folks are throwing money at it like it’s going out of style, hoping to catch a glimpse of the future. I reckon a little prudence is in order, though.

I was lookin’ at this Rigetti Computing company (RGTI +2.93%), and I came to the conclusion last month – a conclusion I still hold, mind you – that puttin’ your hard-earned dollars there, at least in the short term, is akin to bettin’ on a mule in a thoroughbred race. They haven’t been announcin’ many new sales of these quantum contraptions, and that usually means the earnings report ain’t gonna be a pretty sight. We’ll find out in a couple of weeks, on March 4th, if my hunch was right. I suspect it is.

My colleague, John Bromels, a sharp fella, pointed out another risk with Rigetti. Seems they’re years, years I tell you, away from proving this thing is even commercially viable. It’s like buildin’ a castle on a cloud. They need a million of these “qubits,” whatever those are, and a level of accuracy that’d make a Swiss watchmaker blush. Rigetti? They’re still countin’ pennies, so to speak, and a good way off from that goal.

Translation: You might be waitin’ five years, or more, to find out if Rigetti has a real business, or just a heap of expensive dreams. And in this world, five years is a lifetime. A man could lose his shirt, his farm, and his best mule in that time.

Now, I’ve done a bit of cipherin’. Rigetti’s losin’ about $350 million a year, and that loss has been growin’ every year for the last five. Analysts reckon they won’t turn a profit until 2030, and maybe not even then. It’s a bit like tryin’ to fill a bottomless well with a teaspoon.

Seems to me, Rigetti ain’t commercially viable yet, and it might never be. Now, I’m not sayin’ it’s a lost cause entirely. They’ve got a decent pile of cash, enough to keep the lights on for a while, but that don’t mean it’s a wise investment. It’s a gamble, pure and simple.

Now, there’s a better way to play this quantum game, if you ask me. I’m talkin’ about IBM (IBM +2.71%). These IBM folks have been fiddlin’ with quantum computers even longer than Rigetti, and they’ve already racked up over a billion dollars in orders. Rigetti’s barely doin’ $7.5 million in sales. That’s a difference a man could get lost in.

IBM’s workin’ on a “fault-tolerant” quantum computer, and they reckon they’ll have somethin’ commercially viable by 2029. They’re also a good deal more financially sound than Rigetti. They earned $10.6 billion in profit last year, and generated even more free cash flow – $11.6 billion. With a diversified business, IBM’s earnings are growin’ at a steady clip.

Priced at 22.6 times earnings, with a price-to-free-cash-flow ratio of only 20.6, and a dividend yield of 2.6%, IBM ain’t the sexiest investment in the world, but it looks like one of the safest. It’s a solid, dependable horse, while Rigetti’s more like a wild mustang – exciting, maybe, but likely to throw you off before you reach the finish line. And a fella ought to be careful with his money, especially in these uncertain times.

2026-02-25 12:32

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