Rigetti Computing Stock: A Quantum Computing Leader in the Making, Says Top Analyst

Rigetti Computing (NASDAQ:RGTI) has been at the forefront of a trend that has gone ballistic as the year draws to a close. That would be quantum computing, with the tech’s potential sending investors into a frenzy. And by frenzy we mean this is a stock that has gained almost 730% in little over a month.

The thing is, those gains are currently entirely speculative as the commercial impact of quantum computing could still be quite a while away. However, while Craig-Hallum analyst Richard Shannon acknowledges the near-term risks such a meteoric rise poses for investors, he also provides other points of view.

“First,” says the 5-star analyst, “the transformative impact of AI wasn’t recognized by the markets until all at once in the spring of 2023, and investors seem to be anticipating the next elemental step in computing. Second, even after this runup, the $1-8B QC EVs are still quite small compared to the $1T+ market cap classical compute-driven companies that could be disrupted. Third, there is scarcity value in the public markets for QC plays. As such, we think RGTI (and QC) deserves a place in investors’ portfolios today.”

So, what makes Rigetti stand apart from other names? It’s the scaling potential that catches the eye when compared to peers. Shannon, who ranks in the top 2% of Wall Street stock pros, thinks that its extensive experience in chiplet design, its “foundry feedback loop” with the government, and potentially exclusive access to cutting-edge advancements from government labs provides Rigetti with an “underrecognized ability to scale to quantum advantage” as early as C2028 and keep a competitive edge beyond then.

The benefits from the government prioritising quantum computing, the result of which has been and will continue to be substantial near-term spending, are also notable here. This not only provides non-dilutive funding for Rigetti but also opens opportunities for intellectual property transfers that could accelerate its roadmap. Rigetti’s strong connections with various U.S. government agencies, combined with pending legislation to increase funding, will also help progress its quantum computing development.

That, in turn, increases the possibility of M&A. Given its potential to disrupt the vast classical computing market, there is a real possibility for M&A by one of the market’s tech giants that see it as a threat. As the most established U.S.-based pure-play superconducting quantum computing company, Rigetti is “uniquely positioned to benefit from this type of interest.”

As for those huge recent gains and whether the stock still deserves investor attention at current levels, Shannon’s stance is quite clear. “We believe QC can be disruptive to classical compute, and investors who missed the AI theme are looking to QC as the next major theme. As such, higher valuations applied to longer time horizons are likely to remain,” he summed up.

To this end, Shannon initiated coverage of RGTI with a Buy rating, backed by a $12 price target. There’s potential upside of 10% from current levels. (To watch Shannon’s track record, click here)

Wall Street’s current take on this name offers something of a conundrum. On the one hand, based on a unanimous 5 Buys, the stock claims a Strong Buy consensus rating. However, the $3.5 average target suggests the shares are now overvalued by 69%. It will be interesting to see whether analysts downgrade their ratings or update their price targets shortly. (See RGTI stock forecast)

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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.