Shares of Rigetti Computing (RGTI +3.47%) recently experienced a gravitational adjustment – a polite way of saying they fell – after failing to meet revenue expectations. This, in the grand scheme of things, is hardly surprising. Trying to predict revenue in the quantum computing space is a bit like attempting to calculate the trajectory of a particularly indecisive subatomic particle. (It’s mostly guesswork, really, informed by a hopeful reading of probability waves and a generous helping of optimism.) Rigetti, you see, is one of those companies attempting to wrestle the universe into a useful computational form. A noble endeavor, certainly, but one that, as yet, hasn’t translated into a particularly robust income statement. Despite the recent dip – down over 25% year to date, as of this writing – the stock remains up 78% over the last year. This, logically, suggests either an extraordinary level of investor faith or a collective misunderstanding of basic arithmetic.
The central question, then, isn’t so much whether Rigetti can generate revenue, but whether it can do so at a rate that justifies its current valuation. A question that, frankly, feels rather like asking if a goldfish can pilot a Boeing 747. Technically possible, perhaps, but not terribly likely.
Technological Quirks and the Art of Error
Quantum computing, as a field, is fundamentally based on exploiting the inherent uncertainty of reality. (Which is, when you think about it, a rather risky business model.) The technology relies on qubits, which, unlike the bits in your everyday computer, aren’t limited to being either 0 or 1. They can be both, and everything in between, simultaneously. (This is known as superposition, and it’s why quantum computers are so good at confusing accountants.) This flexibility, however, comes at a price: error proneness. Qubits are remarkably sensitive to external influences, meaning even a stray cosmic ray can throw off a calculation. (Imagine trying to solve a complex equation while being repeatedly poked with a feather. That’s the life of a qubit.)
Rigetti, unfortunately, has been lagging its competitors in the crucial area of error reduction. In January, shipments of its Cepheus-1-108Q quantum computer were delayed due to, shall we say, ‘technical disagreements’ with the laws of physics. They now anticipate achieving 99.5% median two-qubit gate fidelity later this month. While commendable, this falls slightly short of IonQ’s 99.99%. It’s a small difference, you might think. But in the quantum realm, a fraction of a percent can be the difference between a groundbreaking calculation and a digital shrug. (It’s like the difference between hitting the bullseye and missing the dartboard entirely.)
This technological struggle has manifested in financial terms. Revenue fell 17% to a mere $1.9 million, missing analyst expectations of $2.3 million. Gross margins declined from 44% to 35%, and operating expenses climbed 19% to $23.2 million, resulting in an operating loss of $22.6 million. The adjusted net loss was $11.3 million, though somewhat offset by higher interest income. (A small consolation prize in the face of existential financial woes.)
Looking ahead, the company anticipates stronger revenue in 2026, fueled by recent orders. Two Novera systems were sold for $5.7 million late last year, with nearly half of that revenue expected in the first quarter. An $8.4 million order for a 108-qubit system from India’s Centre for Development of Advanced Computing is slated for deployment in the second half. (One hopes the system arrives intact, and not disassembled by curious monkeys.)
Should Investors Buy the Dip? (A Question of Sanity)
Rigetti’s revenue is expected to rise from a small base in 2026, but the company remains significantly behind its competitors in terms of system accuracy. Furthermore, it commands a market capitalization exceeding $5 billion despite a projected 2026 revenue of only around $20 million. This valuation is, to put it mildly, optimistic. It’s akin to valuing a slightly damp sponge as if it were a fully functional starship. (Impressive potential, perhaps, but lacking in immediate utility.)
Therefore, while the allure of quantum computing is undeniable, and the potential rewards are astronomical, I believe this is a stock to avoid. It’s not that Rigetti is necessarily doomed to failure. It’s just that the odds are stacked rather heavily against it. And in the world of investing, it’s generally wise to avoid bets that require a miracle. (Unless, of course, you happen to be a miracle.)
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2026-03-10 13:52