Is Rigetti Computing a Millionaire-Maker Stock?

Every few decades, a new technology megatrend comes around with the potential to transform the way people live and work. Most recently, these have included the internet and generative artificial intelligence (AI). But some analysts believe quantum computing could be next.

And if it is, the early movers like Rigetti Computing (NASDAQ: RGTI) could be on track to mint plenty of millionaires over the long term. Optimism has sent the company's shares up by more than 5,000% over the last 12 months.

But is this explosive rally based on hype or fundamentals? Let's dig deeper to see what the company's future might hold.

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What is quantum computing?

Quantum computing is a field of computer science and physics that promises to solve problems too complex for modern supercomputers through an innovation called the qubit. Unlike a classical bit, which can only be in one of two states at a time, a qubit can be in multiple states simultaneously. Investors can compare this to a coin that is lying flat (classical bit) versus a coin that is spinning in the air (a qubit).

The technology behind quantum computing isn't ready for prime time. But analysts at McKinsey & Company believe the industry could be worth $100 billion in a decade as it helps revolutionize industries like pharmaceutical drug discovery, logistics, and materials science.

Why is Rigetti stock soaring?

Rigetti Computing is trying to position itself as the Nvidia of quantum computing. Like the AI hardware leader, Rigetti is also pursuing a pick-and-shovel business model, where it offers the chips, processors, and other forms of infrastructure that other companies can use to service the potential opportunity. Rigetti is also pioneering a vertical it calls Quantum Cloud Services (QCS), which could make its quantum computing power accessible over the cloud via traditional computer infrastructure.

Late last month, the company secured a three-year, $5.8 million contract with the Air Force Research Laboratory, where it will help develop new chip fabrication technologies alongside Iowa State University, the University of Connecticut, and others. The company also announced purchase orders for two of its Novera quantum computing systems worth $5.7 million, with delivery expected in the first half of 2026.

However, while these recent deals are an impressive vote of confidence in Rigetti's technology, investors shouldn't lose sight of the speculative nature of the quantum computing industry. These machines are still for research and experimentation, not profit-driven use. Sustainable commercialization could be years or even decades away. In the meantime, Rigetti's operational results leave much to be desired.

The company earned just $1.8 million in revenue but generated an operating loss of about $19 million because of massive outflows, including research and development, which probably can't be significantly reduced because of the cutting-edge nature of quantum engineering.

And while one-off research sales will help Rigetti stem its cash burn in the coming quarters, investors shouldn't expect the company to achieve sustainable profitability until quantum computing is ready for commercialization. And it is still unclear when (or even if) that will happen.

Is Rigetti Computing a millionaire-maker stock?

On the surface, Rigetti has all the ingredients of a millionaire maker as an early mover in the potentially massive long-term opportunity in quantum computing. But right now, it doesn't offer much to get excited about from a fundamental perspective. Investors who buy the stock now could face years of losses before they get a sniff of sustainable profitability.

Furthermore, the recent rally has made shares quite expensive with a price-to-sales (P/S) ratio of 1,100 compared to the S&P 500 average of 3.4. Growth investors should look elsewhere for a better deal.

Will Ebiefung has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nvidia. The Motley Fool has a disclosure policy.