Down 54%, Should You Buy the Dip in Rigetti Computing (RGTI) Stock?

Rigetti Computing's (NASDAQ: RGTI) stock closed at a record high of $56.34 per share on Oct. 15, 2025. That marked a 6,850% gain over its previous 12 months, and was fueled by new contracts, analysts' upgrades, and a growing enthusiasm for quantum computing stocks.

Yet over the following three months, Rigetti's stock was cut in half and now trades at about $26. Let's see why its stock fizzled out, and if that dip is a buying opportunity for patient investors.

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What does Rigetti Computing do?

Quantum computers can process larger amounts of data at a faster rate than classical computers, but they're also bigger, pricier, consume more power, and output a higher percentage of errors. That's why these systems are still primarily used for niche research projects at government agencies and universities, rather than mainstream computing applications.

Rigetti, like many other early movers in the quantum market, accelerates electrons through superconducting loops to achieve a quantum state. However, these systems require cryogenic refrigeration, which increases their size and long-term operating costs.

Rigetti produces modular and non-modular quantum processing units (QPUs). Its modular Novera QPUs can be linked together to boost the computing power of a single quantum system. It also sells two of its own quantum systems: Ankaa-3, which utilizes a single non-modular chip, and Cepheus-1-36Q, which operates four of its modular QPUs. It allows its developers to create their own quantum algorithms on its cloud-based Forest platform.

Rigetti is a "full-stack" quantum computing company that bundles together all of the necessary hardware, control electronics, software, and integration tools with classical computers. That "one-stop shop" approach should lock in its customers and widen its competitive moat. It also differentiates itself from other fabless chipmakers (which outsource their production to third-party foundries) by manufacturing its own chips.

Why did Rigetti's stock sink?

Rigetti's revenue soared 60% in 2022, but dropped 8% in 2023 and fell 10% in 2024. Analysts expect another 30% decline to $7.6 million in 2025.

It mainly attributed that slowdown to the expiration of its contract with the U.S. National Quantum Initiative (NQI) and the uneven timing of its other government contracts. However, it also faces stiff competition from tech giants like IBM (NYSE: IBM) and Alphabet's (NASDAQ: GOOG) (NASDAQ: GOOGL) Google, which both use similar electron-driven superconducting loop systems, as well as IonQ (NYSE: IONQ), a producer of laser-powered "trapped ion" systems that don't need to be cryogenically refrigerated.

That competitive pressure -- along with the high costs of manufacturing its own chips and systems -- could prevent it from achieving a break-even point. Its annual net loss widened from $72 million in 2022 to $201 million in 2024, and analysts anticipate an even wider loss of $215 million in 2025.

That outlook seems bleak, but Rigetti expects its computing power (as measured in qubits) to soar over the next two years. Its newest Ankaa-3 system can run 84 qubits, but it plans to deploy a system with 100+ qubits in early 2026, a system with 150+ qubits by the end of the year, and a system with 1,000+ qubits by the end of 2027. Assuming it achieves those ambitious goals, analysts expect its revenue to soar 169% to $20.5 million in 2026 and 124% to $45.8 million in 2027. They also expect it to narrow its annual net loss to $80 million by 2027.

That rosy outlook -- along with the market's growing appetite for quantum stocks, new government deals, and fresh partnerships -- propelled its stock to its record high last October. Yet, at its peak, Rigetti's market cap reached $18.3 billion, equivalent to 2,408 times its projected revenue for 2025 and 398 times the revenue it's expected to generate in 2027. That meme stock valuation was clearly unsustainable, and its shares collapsed as short-term traders booked substantial profits.

Is it the right time to buy Rigetti's stock?

Even after being cut in half, Rigetti is still valued at $8.3 billion, or 182 times its projected 2027 sales. It has also increased its number of outstanding shares by 160% over the past three years through secondary offerings and stock-based compensation, and this dilution will continue for the foreseeable future. In other words, Rigetti's stock could decline another 90% and still be considered expensive relative to its growth potential.

Rigetti has already missed its original goal of launching its 100+ qubit system in late 2025, and any further delays could derail its plans to surpass the 1,000+ qubit mark next year. IBM already launched its 1,121-qubit Condor chip in 2023 and 156-qubit R2 Heron chip in 2024, so Rigetti's newest systems might not gain as much attention as its bullish investors expect.

Simply put, Rigetti is a lot riskier than many of its quantum peers. I wouldn't rush to buy it in this wobbly market, especially before it proves it can scale up its business and outperform its rivals.

Leo Sun has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Alphabet, International Business Machines, and IonQ. The Motley Fool has a disclosure policy.