Is Rigetti Computing Stock a Buy Now?

Rigetti Computing (NASDAQ: RGTI) stock has been on a tear in recent months. Six months ago, the stock was trading at a price of under $1. Now, it is up close to 850%, making it one of the best-performing stocks in the world over the last few quarters. The quantum computing start-up is catching investor attention with recent breakthroughs in the industry that could lead to upcoming commercialization of the technology.

After zooming higher, Rigetti stock has started to fall in recent weeks and now sits down 60% from all-time highs. Does this make the stock a "buy the dip" candidate for your portfolio today?

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Commercializing quantum computing

Quantum computers are the proposed next step for the computing industry, which has been driven by semiconductor/silicon-driven hardware for decades. It's getting harder and harder for companies to eke out improvements for existing computer chips, hence why the likes of Taiwan Semiconductor Manufacturing and Nvidia are spending tens of billions of dollars to make slightly faster chips every year. Using quantum mechanics, quantum computers can operate much faster than traditional computers, and with fewer electricity demands. If commercialized, they could eliminate two of the major bottlenecks in cloud computing and artificial intelligence (AI): Speed and power efficiency.

The problem is getting quantum computers to actually work reliably. Rigetti Computing is one of the companies in the race to try to bring reliable quantum computers to market. It is working with universities, government research labs, and business partners to try to solve this monumental problem. If it does, there is a major opportunity to sell these computers for uses in climate simulation, molecular simulation, and AI.

So why are investors excited about Rigetti now? It's likely due to the recent breakthroughs in quantum computing technology from large technology players such as Alphabet and Microsoft. Investors are now excited about this growth sector and want exposure to the trend. Rigetti Computing is one of the few pure-play quantum computing stocks out there, and it has turned into a momentum stock driven by news releases.

Minimal revenue and large competitors

Rigetti's stock has soared in recent months, but this has nothing to do with its financial results. In fact, Rigetti doesn't generate much in revenue at all. Over the last 12 months, revenue was just $12 million. With a large amount of expenses used to research and develop its quantum technology, Rigetti is burning a lot of cash. Free cash flow was negative $66 million over the last 12 months. With $225 million in cash on the balance sheet, Rigetti still has a lot of room to lose money before it needs to raise more funds, but it can't go on in this start-up phase indefinitely.

There are also a ton of large competitors in quantum computing with vast resources compared to Rigetti. These include Microsoft and Alphabet (the parent company of Google). Both are developing their own quantum computing chips and building quantum computers, and they plan to sell these technologies on their own cloud computing infrastructure. With tens of billions in cash on their respective balance sheets, these companies have the ability to outspend Rigetti when it comes to product development, which is a major advantage.

Investors may get excited about the future earnings potential for Rigetti if it wins the race to quantum commercialization, but this is a business with close to zero in revenue, operating in a sector with many large competitors vying for the same goal. It's uncertain whether Rigetti can win this race.

Data by YCharts.

Should you buy Rigetti stock?

Even though it's one of the best-performing stocks of the last few quarters, Rigetti stock is not a buy today. Shares trade at a market cap of $1.63 billion. Remember, revenue was only $12 million over the past 12 months. The company is burning a ton of cash and will likely continue to burn cash over the next few years. This is a wildly overvalued stock compared to its business fundamentals.

Quantum computing is an exciting technology, and there is a huge addressable market for any company that can properly commercialize it (if it is even possible). That does not mean every quantum computing stock will do well, though. Avoid buying Rigetti Computing stock for your portfolio today.

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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Brett Schafer has positions in Alphabet. The Motley Fool has positions in and recommends Alphabet, Microsoft, Nvidia, and Taiwan Semiconductor Manufacturing. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.