These 2 Growth Stocks Are Soaring, but Wall Street Expects Downside

This has been an outstanding year for more than a few technology stocks. Unfortunately, stocks that rise quickly tend to come back to earth just as quickly.

Shares of Rigetti Computing (NASDAQ: RGTI) and Applied Digital (NASDAQ: APLD) have produced enormous gains over the past 12 months. The investment bank analysts tasked with following these stocks, though, aren't too enthusiastic about their paths forward. Consensus price targets suggest they could tank in the year ahead.

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1. Rigetti Computing

Folks who bet $1,000 on Rigetti Computing a year ago have gained enough to buy a new full-sized pickup. During the 12 months ended Oct. 9, 2025, shares of the quantum computing stock rocketed 5,950% higher.

Rigetti is pursuing a pick-and-shovel business model, where it offers processors and other infrastructure that companies need to implement a quantum computing strategy. It seems Rigetti's model resonates with a very important customer. The stock soared in September after the company reported a three-year contract with the Air Force Research Laboratory to advance superconducting quantum networking.

A contract with the government is a step in the right direction, but it looks like the market is a little too excited about this emerging technology. The company's contract with the Air Force is worth only $5.8 million. The company's market cap has risen above $15 billion at recent prices.

The Air Force deal is a significant one for a company as small as Rigetti. During the 12-month period ended June, the company recorded just $7.9 million in revenue.

A big market value and low revenue mean this stock's price has been trading for about 1,450 times trailing-12-month sales. Few companies have ever grown quickly enough to justify such a high multiple. If unbridled enthusiasm for quantum computing stocks dissipates before this company can increase revenue more than 100-fold, investors who buy at recent prices could suffer heavy losses.

Citing an extreme valuation, Wall Street analysts are expecting a pullback in the stock. The consensus price target of 28.29 per share is around 41% below the stock's recent price.

2. Applied Digital

During the 12 months ended Oct. 9, 2025, shares of Applied Digital soared 273% higher. The stock started taking off in June after artificial intelligence (AI) hyperscaler CoreWeave signed a deal for 250 megawatts' worth of data center capacity.

Over the 15-year contract with CoreWeave, Applied Digital expects to generate $7 billion in revenue. This is a big deal for a company that reported just $215 million in total revenue during the 12 months ended June.

The consensus price target for Applied Digital is $16.20 per share at the moment. That's about 57% below the stock's recent price. While analysts aren't expecting further gains, this stock's valuation is far more reasonable than valuations for quantum computing stocks. Hyperscalers are expected to invest approximately $350 billion in AI development in 2025, which strongly suggests more data center deals are on the way for Applied Digital and its peers.

According to Wes Cummins, Applied Digital's CEO, the already announced CoreWeave deal supports roughly half a billion in annual net operating income. The company's Polaris Forge 1 Campus is engineered to scale up to 1 gigawatt, or 4 times more power than it will set aside for its CoreWeave contract. If you consider these two initiatives, management's goal to reach $1 billion in annual operating income within five years seems reasonable.

At recent prices, Applied Digital's market cap is about $9.6 billion. This is less than 10 times the amount of operating income expected five years from now. Despite a negative warning from Wall Street, this stock could be a big winner as long as we don't see an unexpected decline in data center demand over the next several years.

Cory Renauer 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.