RGTI Trails Quantum Rivals in the Past Month: Time to Hold or Sell?

Rigetti Computing RGTI posted an impressive year-to-date gain, but a closer look at recent developments reveals growing competitive pressure. Recently, industry players like IonQ IONQ and D-Wave Quantum QBTS, along with technology leaders like International Business Machines IBM, extended their lead in both quantum advancement and commercialization.  

IBM advanced its 1,121-qubit Condor system and reaffirmed its ambitious roadmap toward practical quantum utility by 2026. IonQ delivered a strong first-quarter performance with a 77% year-over-year revenue increase. Meanwhile, D-Wave continued carving a niche with real-world applications in logistics and optimization, positioning itself as a go-to player for near-term quantum solutions.

In contrast, Rigetti’s first-quarter results painted a more cautious picture. Revenue came in at just $1.5 million, missing estimates and reflecting continued dependence on government contracts. The company reiterated a three-to-five-year timeline for meaningful commercial traction, a stark contrast to peers already monetizing their tech. While Rigetti’s Ankaa-3 system showed strong technical progress, the company’s ability to convert innovation into revenue remains in question. A recent $350 million equity raise boosts liquidity, but with market leaders gaining both visibility and customer momentum, RGTI now faces a tougher path. Investors should closely monitor execution before reassessing their position.

RGTI Shares Underperform Industry & Peers

Rigetti’s shares have underperformed the Zacks Internet - Software industry and its industry peers, which include IONQ, QBTS and IBM, in the past month.

RGTI stock has risen 4% in the past month. Shares of IONQ and QBTS have significantly gained 15.9% and 43.4%, respectively. IBM shares have gained 9% during the same period. The broader industry has improved 4.6% over the same timeframe.

Let's delve deeper and determine the best course of action for your portfolio regarding the RGTI stock.

Challenges Intensify for RGTI Amid Peer Outperformance

Slower Commercial Traction Compared to Peers: While Rigetti continues to advance technically with developments like the Ankaa-3 system, its revenue growth remains modest. In the first quarter of 2025, the company reported just $1.5 million in revenues, well below estimates and a sharp contrast to IonQ’s 77% year-over-year revenue surge and $72.5 million in forward bookings. D-Wave, too, is making progress by landing enterprise use cases that bring in steady demand. This growing commercial gap highlights Rigetti’s slower pace in translating innovation into monetizable offerings, especially as peers move more aggressively into scalable, revenue-generating contracts.

Heavy Reliance on Government Contracts: Rigetti’s revenue model remains heavily anchored to government-funded R&D contracts and pilot programs. While these partnerships, often with agencies like DARPA and the Department of Energy, offer technical validation and valuable funding, they tend to be short-term, project-based, and non-recurring. This limits visibility into future cash flows and creates volatility in quarterly performance. As a result, Rigetti lacks the kind of steady, diversified revenue stream that typically attracts institutional investors or long-term commercial partnerships.

In contrast, competitors like IonQ and D-Wave are building broader, more scalable customer ecosystems. IonQ has secured long-term partnerships with cloud platforms such as Amazon Web Services and Microsoft Azure, giving it consistent access to enterprise clients and repeat business. D-Wave, focusing on quantum annealing, is rapidly expanding into commercial use cases in logistics, finance, and manufacturing, where it delivers tangible business outcomes today. Until Rigetti can diversify its customer base and build similar long-term commercial pipelines, it may continue to face investor skepticism and remain at a disadvantage in a rapidly maturing market.

Execution Lag Despite Strong Technical Roadmap: Rigetti has laid out a clear and ambitious hardware development roadmap, and its Ankaa-3 system reflects notable progress on the technical front. However, the company continues to lag in executing on the commercialization front, especially when compared to faster-moving peers. While competitors like IonQ and D-Wave are actively translating R&D into market-ready solutions, Rigetti is still several years away from targeting commercial utility in a meaningful way. Management has maintained a three-year outlook for achieving product-market fit, which may test investor patience given how quickly others in the sector are scaling adoption.

RGTI Shares Look Overvalued

Rigetti’s stock is not so cheap, as suggested by the Value Score of F.

RGTI is currently trading at a price-to-book (P/B) ratio of 16.7X, which is more than two times higher than the industry average of 6.4X. This can mean that investors are valuing the company far above the worth of its actual assets, largely because of its potential in quantum computing rather than its current financial performance. Such a high P/B ratio suggests that the stock is priced for significant growth and innovation, but it also makes it highly sensitive to execution risks or negative news.

RGTI’s Sales & EPS Growth

In 2025, Rigetti is likely to witness a decline of 18.6% in revenues. On the profitability front, earnings per share are expected to remain negative but with an improvement of 86.1% year over year. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

How to Play Rigetti’s Stock Now?

Rigetti remains a technically innovative player in quantum computing, but its investment case is weakened by limited commercial traction, heavy reliance on government contracts, and consistent execution shortfalls. Despite strong R&D, the company’s revenue remains modest, and it faces stiff competition from peers like IonQ and D-Wave, who are rapidly scaling real-world applications.

Adding to concerns, RGTI trades at a premium price-to-book ratio versus the industry, which is difficult to justify given its current financial performance. With a Zacks Rank #4 (Sell), Rigetti is best viewed with caution until meaningful revenue growth and execution improvement emerge. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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This article originally published on Zacks Investment Research (zacks.com).

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