Why Rigetti Computing Is Extremely Volatile Today

Key Points

• Rigetti Computing is a leader in the quantum computing space.

• Rising long-term U.S. Treasury yields seemed to knock many stocks down earlier today.

• However, Rigetti also received a significant price target hike from a Wall Street analyst.

• 10 stocks we like better than Rigetti Computing ›

Shares of Rigetti Computing (NASDAQ: RGTI) traded close to 11% down earlier today before recouping much of those losses. As of 11:42 a.m. ET today, the stock traded close to 2% higher. Rising U.S. Treasury bond yields seemed to hurt stocks earlier today, but a Wall Street analyst also significantly increased their price target on Rigetti this morning.

Despite Wall Street upgrade, all eyes on bond yields

Despite the Federal Reserve lowering interest rates last week, longer-term Treasury yields edged higher over the past several days, as this group of investors may be concerned that the Fed isn't properly accounting for future inflation, leading them to sell bonds, which boosts yields. Rising bond yields can have a negative impact on stocks, especially high-growth and speculative stocks like Rigetti.

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Rigetti's volatility also comes as B. Riley Financial analyst Craig Ellis reiterated a buy rating on the stock this morning and significantly hiked his price target from $19 per share to $35 per share. In his research note, Ellis attributed his bullish look to accelerated progress in the broader quantum computing space and regulatory front. The Department of Energy's National Laboratories are now interested in not just seeing if quantum computers are viable, but also the commercialization of such technology, he said.

Last week, Rigetti announced a $5.8 million contract with the U.S. Air Force Research Laboratory (AFRL) to lead the charge on developing a superconducting quantum networking, which would essentially be the next iteration of the internet, with much more enhanced capabilities.

Big risk, big reward

The quantum computing space has immense potential and could be the biggest thing since artificial intelligence (AI). Rigetti is viewed as a leader in the space. If quantum computers can be commercialized and are as impactful as researchers believe, then Rigetti will be a phenomenal investment.

But there's still a lot that needs to happen between now and then, and Rigetti still generates very little revenue, despite trading at close to a $9 billion market cap. That's why I'd keep positions smaller and more speculative.

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Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.