Rigetti Computing, listed on NASDAQ under the ticker RTGI, has experienced a dramatic surge in its stock price, gaining 223% year to date as interest in quantum computing intensifies on Wall Street. Despite the industry being comparatively low-profile alongside the more publicised advancements in generative artificial intelligence (AI), analysts suggest that quantum computing could possess equally significant long-term implications for various sectors.
Quantum computers represent a leap forward in computational ability, leveraging principles of quantum mechanics to address complex problems at unprecedented speeds relative to traditional computing systems. According to analysts from McKinsey, the potential economic impact of quantum technology could reach an impressive $1.3 trillion by 2035, with major growth expected in areas such as pharmaceutical development and materials science. Furthermore, analysts posit that quantum computing could serve a vital role in enhancing the training of AI algorithms and neural networks, thus making it a relevant avenue for businesses looking to tap into the burgeoning AI market.
Rigetti positions itself similarly to Nvidia within the quantum realm, operating on a "picks-and-shovels" business model. The company is dedicated to developing quantum computing technology, particularly through its Quantum Cloud Services (QCS) platform. This service allows clients to access Rigetti’s quantum processors remotely via the cloud, facilitating integration with existing traditional computer infrastructures. Such an offering could substantially reduce costs for businesses as opposed to independently developing their quantum capabilities.
Despite its impressive stock performance, Rigetti is still in the early stages of its operations. Following a reverse merger with a special-purpose acquisition company (SPAC), the company has faced challenges, reporting a 23% decline in third-quarter revenue, which fell to $2.4 million compared to the previous year. Although Rigetti still managed to generate a gross profit of $1.2 million, it incurred a significant operating loss of $17.3 million due to steep investments in research and development, alongside operational costs.
The financial challenges extend beyond operational losses. Rigetti has spent an alarming $9.7 million on stock-based compensation to date this year. While this strategy can aid in liquidity and motivate the workforce, it has the downside of diluting shareholder stakes due to an increased number of shares in circulation, which adversely affects future earnings and cash flow claims.
As Rigetti Computing navigates these early operational trials, stakeholders and investors are closely monitoring its trajectory amid a rapidly evolving landscape in AI and quantum technologies.
Source: Noah Wire Services