Rigetti Computing’s 112% Surge: Quantum Hype Meets Meme Stock Fever

The recent surge in Rigetti Computing’s stock represents a perfect storm of technological promise and speculative trading. The momentum began building when B. Riley analyst raised his price target from $19 to $35 per share just days before an 11% single-day jump, despite no specific company news. This pattern mirrors the 2021 GameStop (NYSE:GME) phenomenon, where retail traders on platforms like X and Reddit drove unprecedented price movements based on collective enthusiasm rather than fundamental analysis. The comparison to artificial intelligence’s explosive growth has particularly resonated with investors seeking the ‘next big thing’ in technology.

What makes Rigetti’s case particularly intriguing is the blend of legitimate technological advancement with pure market speculation. While the company has made genuine progress in quantum computing, the stock’s performance has dramatically outpaced even the most optimistic analyst projections. With shares trading at $31.46—surpassing the $21.42 consensus target—and showing another 4% gain in premarket trading, the valuation appears increasingly disconnected from traditional financial metrics. This creates a precarious situation where investors are betting heavily on a future that remains years from commercial viability.

Beneath the market frenzy lies a company with substantive achievements and significant government support. Rigetti recently secured a $5.8 million contract with the Air Force Research Laboratory (AFRL) in partnership with Dutch quantum networking company QphoX, aimed at developing scalable quantum systems comparable to classical supercomputers. This follows a five-year qubit fabrication contract with the Air Force that provides steady research and development funding. Internationally, the company has strengthened its position through a memorandum of understanding with India’s C-DAC targeting hybrid quantum systems and $4.7 million in grants from U.K. Innovate.

Technologically, Rigetti has demonstrated meaningful progress with the July launch of its 36-qubit Cepheus-1-36Q processor, featuring 99.5% median two-qubit gate fidelity. This multi-chip system, now available on Rigetti’s Quantum Cloud Services and soon on Microsoft Azure, represents a scalable step toward practical applications in optimization and simulation. The December 2023 release of the 84-qubit Ankaa-3 processor achieved similar fidelity marks, proving that superconducting qubits are approaching utility. A $35 million investment from Quanta Computer as part of a $200 million partnership further fuels this scaling effort, providing the capital necessary for continued innovation.

These government contracts and technological milestones provide crucial credibility in a field where theoretical potential often outweighs practical achievement. The involvement of prestigious organizations like DARPA through its Quantum Benchmarking Initiative and additional funding from the Air Force Office of Scientific Research ($5.48 million grant) signals that Rigetti’s technology is considered seriously by experts in the field. However, the gap between laboratory success and commercial application remains substantial, creating tension between the company’s promising trajectory and its current financial reality.

Despite the impressive stock performance and technological promise, Rigetti’s financial fundamentals tell a different story. Second-quarter revenue stood at just $1.8 million, dwarfed by $20.4 million in operating expenses. While the company reported a $42.6 million profit in the first quarter, this resulted from one-time non-cash gains rather than sustainable business operations. The $10 billion market valuation appears particularly ambitious when compared to these financial metrics, raising questions about how long the enthusiasm can persist without stronger commercial foundations.

The competitive landscape further complicates Rigetti’s position. IonQ (NYSE:IONQ), with its trapped-ion technology and $1.6 billion in pro forma cash, represents a formidable competitor with arguably superior financial resources. Similarly, D-Wave Quantum (NYSE:QBTS) has demonstrated more substantial commercial progress with $18.1 million in year-to-date annealing revenue. Rigetti’s June $350 million at-the-market equity raise also creates potential for additional shareholder dilution, adding another layer of risk for investors riding the current wave of optimism.

Wall Street analysts maintain cautious optimism despite these challenges. Benchmark maintains a $20 price target, Needham projects $18, and Craig-Hallum reaffirms its ‘Buy’ rating following second-quarter results. However, with the stock already trading well above most targets, the disconnect between analyst expectations and market performance highlights the speculative nature of the current rally. As John Maynard Keynes famously observed, ‘The market can remain irrational longer than you can remain solvent’—a warning that seems particularly relevant to Rigetti’s current trajectory, where mania could continue driving prices upward before fundamental realities reassert themselves.