TLDR:
- Rigetti Computing shares rose 21% in a week after being chosen for DARPA’s Quantum Benchmarking Initiative
- The company secured a $35 million investment from Quanta Computer with shares purchased at $11.59
- Analysts have given RGTI a “Strong Buy” rating with price targets suggesting up to 62% upside
- Rigetti outperformed both the general market and semiconductor sector over the past year
- The company expects 39.2% annual revenue growth despite not yet achieving profitability
Rigetti Computing, a developer of quantum computing technology, saw its stock price climb 21% over the past week. This sharp increase followed an announcement that the company had been selected to participate in the Defense Advanced Research Projects Agency’s (DARPA) Quantum Benchmarking Initiative.
The selection represents a move to “Stage A” for Rigetti. This phase involves a detailed evaluation of the company’s utility-scale quantum computer concept.
For this DARPA project, Rigetti has formed a partnership with Riverlane. Together they will work to advance quantum computing capabilities.
The general market rose approximately 5% during the same period. Rigetti’s performance represents a substantial outperformance compared to broader market trends.
Investment Boost and Growth Plans
A major development for Rigetti is its recently secured $35 million strategic investment from Quanta Computer. The deal includes Quanta purchasing Rigetti shares at $11.59 each, which represents a premium over current market prices.
The partnership aims to channel more than $100 million toward accelerating development and commercialization of superconducting quantum computing technology. This investment is planned to span the next five years.
Both companies intend to leverage their respective strengths to make progress in quantum computing technology. The partnership could prove valuable for Rigetti’s growth trajectory.
Industry forecasts suggest the quantum computing market will expand rapidly in coming years. Experts project annual revenues in the sector could reach between $1 billion and $2 billion by 2030.
Rigetti’s participation in this growing market gives it unique opportunities for expansion. The company’s full-stack approach to quantum computing provides it with potential advantages.
Analysts’ Positive Outlook
Wall Street analysts have expressed optimism about Rigetti’s prospects. The stock has received a “Strong Buy” consensus rating based on six Buy recommendations issued over the past three months.
The average price target from analysts stands at $14.80. This represents a potential upside of 62% from current trading levels.
One particularly bullish analyst, Brian Kinstlinger from Alliance Global Partners, maintains his Buy rating on RGTI stock. His forecast suggests an upside potential of over 75%.
Rigetti is included in the Russell 2000 index, which tracks 2,000 small-cap stocks in the United States. This inclusion provides the company with added visibility among investors following small-cap markets.
The stock currently trades well below analyst price targets. This gap suggests possible room for price appreciation, though investors should consider the inherent volatility in technology stocks.
Business Model and Performance
Rigetti specializes in designing and building superconducting quantum processors. The company provides access to these processors through its cloud platform called Forest.
As an integrated provider, Rigetti develops both the quantum hardware and the software tools required to program and use these systems. The company’s technology has applications across multiple sectors including finance, pharmaceuticals, and defense.
Despite its promising technology, Rigetti is not yet profitable. However, the company projects revenue growth of 39.2% annually, which could help it move toward profitability in the future.
Investment analyses have identified four weaknesses in Rigetti’s profile. Potential investors should examine these concerns as part of their research process.
Over the past year, Rigetti Computing has delivered strong returns to shareholders. The company’s one-year return has exceeded both the overall U.S. market return of 3.6% and the semiconductor industry return of 3.8%.
This performance highlights Rigetti’s potential in the quantum computing market. As demand for quantum computing grows, the company appears positioned to benefit from industry expansion.
The recent DARPA selection and Quanta partnership may contribute positively to Rigetti’s future financial results. These developments provide additional momentum for the company’s growth strategy in the highly competitive technology sector.
