Rigetti Computing (NASDAQ:RGTI) is getting a lot of buzz as interest in quantum computing heats up. The stock has been on an incredible run, jumping over 330% in less than three months since September.
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The rally gained momentum after Donald Trump’s election victory, a twist that seems logical to Alliance Global analyst Brian Kinstlinger.
“We believe quantum stocks are rallying with the expectation that the incoming Trump administration will prioritize getting the Quantum Initiative Reauthorization Act passed in early 2025, which results in five times the U.S. funding compared to the original legislation,” Kinstlinger explained.
Meanwhile, Rigetti has been sorting out its own funding. Following some ATM (At-The-Market) offerings, the company has over $250 million of cash in the coffers. Management has said it would need near to $250 million to get to profitability and given the pre-revenue company burns about $50 million a year, Kinstlinger makes the case that Rigeti now has the funds required to reach profitability, which the analyst predicts will take place in 2028.
So, how will it do that? By developing gate-based QPU (quantum processing unit) technology capable of achieving quantum advantage (quantum advantage is when a quantum computer performs a task faster or more efficiently than the best classical computers can).
While the company is pre-revenue, Kinstlinger takes a bullish stance, believing the “driver of value creation” will be major R&D wins from national labs as well as “major achievements in moving along its technology roadmap with the end goal of achieving quantum advantage.” At that stage, the QPU’s error rate would be so low that its speed, power, and performance would surpass CPUs and GPUs by orders of magnitude.
The company aims to deploy its 84-qubit Ankaa-3 system with 99% fidelity before the year is out and manufacture 100-qubit systems with 99.5% fidelity by the middle of next year. Combined with error correction, doing so could mark the “beginning of demonstrating quantum advantage.”
Meanwhile, other names operating in the space, such as IONQ, have also benefitted from the rally. But with a market cap of almost $8 billion (vs. RGTI’s $586 million), and having what Kinstlinger considers as inferior technology, RGTI shares have “considerable upside.” IONQ’s loftier valuation is down to its strong balance sheet and leadership within the peer group. However, with RGTI’s recent capital raises, Kinstlinger believes it is in “an equally favorable positioning.”
To this end, Kinstlinger rates RGTI shares as a Buy, while raising his price target to $5.5 (from $3.5). Should the figure be met, investors will be pocketing returns of 83% a year from now. (To watch Kinstlinger’s track record, click here)
Overall, based on a full house of Buys – 5, in total – the analyst consensus rates this stock a Strong Buy. The average price target clocks in at $3.5, implying shares will climb ~17% higher in the months ahead. (See RGTI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
