Rigetti Computing (NASDAQ:RGTI) has been suffering from quite the New Year’s hangover. The shares – which gained an astonishing ~2,400% over the last few months of 2024 and into the first week of January – have been drooping ever since, losing 41% year to date.
The rabid excitement over the quantum revolution has given way to doubts about its near-term applicability. None other than tech visionary Jensen Huang, CEO of Nvidia, popped a large hole in the quantum bubble when he publicly doubted that the technology would be ready for prime time within the coming decade.
However, Nvidia is not turning its back on quantum computing – quite the opposite. Shortly after Huang made his comments, the company announced its intention to hold Quantum Day.
That day arrived today at the GTC 2025 conference, where Nvidia delivered major announcements, including the establishment of a quantum research lab in Boston in collaboration with Harvard and MIT. Furthermore, during the event, Huang revised his earlier skepticism, admitting his timeline for real-world quantum breakthroughs might have been too cautious.
Yet, for Rigetti and other quantum names, the celebration quickly turned into a selloff. In a textbook “sell the news” move, traders who had piled in ahead of the event took their gains and moved on.
One investor, known as Stone Fox Capital, had seen this coming. The investor warned before the event that Rigetti’s stock was vulnerable to a pullback, calling into question the fundamental story behind its lofty valuation.
“The stock already has a market cap of $3 billion, so a disconnect is already clear when the quantum computing company can only add a very minimal $3 million in additional revenues this year,” the investor opined.
Moreover, Stone Fox points out that RGTI will need to “ramp up” its cash burn in the years ahead if it wants to succeed in the increasingly competitive quantum market, with much larger companies with deeper pockets entering the fray. This raises concerns about Rigetti’s ability to compete effectively without resorting to additional funding, which could dilute shareholders.
All this is happening against a backdrop of commercial sales remaining fairly stagnant, explains the investor. With RGTI’s ultimate goal of 1,000-qubit chips – which Stone Fox notes the company believes will make it commercially viable – still another 4 to 5 years away, the roadmap for success is long indeed.
In short, Stone Fox’s advice is blunt: take the profits when you can. The investor rates RGTI a Strong Sell. (To watch Stone Fox Capital’s track record, click here)
Wall Street, in contrast, is not ready to cut and run. With 6 Buy ratings, RGTI enjoys a Strong Buy consensus rating. Its 12-month average price target of $14.80 suggests a ~65% upside in the coming year. (See RGTI stock forecast)
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Disclaimer: The opinions expressed in this article are solely those of the featured investor. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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