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Rising Losses Weigh on Rigetti's Outlook: Sell or Hold RGTI Stock Now?
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Key Takeaways
Rigetti Computing shares dip 10.5% in a month as widening losses and weak revenue visibility weighed.
RGTI's Q2 operating loss widened to $28.1M as expenses jumped 48% despite 185.3% revenue growth.
RGTI remains reliant on government and system contracts, while key qubit and fidelity goals are years away.
Rigetti Computing (RGTI - Free Report) shares have remained under pressure over the past month as investors continue to question the pace at which quantum computing companies can convert technological milestones into sustainable commercial growth.
RGTI stock has lost 10.5% over the past month, underperforming both the broader market and several of its closest peers. During the same period, shares of IonQ (IONQ - Free Report) and Quantum Computing Inc. (QUBT - Free Report) lost 4.9% and 8%, respectively. The divergence highlights continued investor skepticism toward Rigetti even as it promotes progress on its quantum computing roadmap.
The company's second-quarter results did little to change that narrative. Although revenues jumped year over year on Novera system sales, widening operating losses, higher research spending and a business still heavily dependent on milestone-based government and system contracts reinforced concerns that meaningful commercial adoption remains a long way off.
Image Source: Zacks Investment Research
What's Weighing on Rigetti's Investment Story?
Mounting Losses Continue to Outpace Revenue Gains
Rigetti's impressive second-quarter revenue growth did little to ease concerns around its cost structure. While revenues climbed 185.3% year over year to $5.1 million, operating expenses surged 48% to $30.3 million, due to heavier spending on engineering, chip design, fabrication and refrigeration infrastructure. The widening cost base pushed operating loss to $28.1 million from $19.9 million a year ago, underscoring that profitability remains elusive despite stronger hardware sales.
The company is also signaling that spending will remain elevated. Management expects higher capital expenditures throughout 2026 as it continues investing in Fab-1 and dilution refrigeration capacity to support future generations of quantum processors rather than near-term revenue optimization. That approach may strengthen the long-term roadmap, but it also suggests investors could face prolonged cash burn before meaningful operating leverage emerges.
Commercial Adoption Still Remains a Long-Term Story
A more pressing challenge is that Rigetti's commercial business is still at an early stage. Management acknowledged that most customers continue using its quantum systems for research, algorithm development and experimentation instead of practical production workloads. The company also reiterated that achieving commercially meaningful applications still requires reaching roughly 1,000 physical qubits, higher 99.9% two-qubit fidelity and better error mitigation, goals that remain several years away.
That leaves revenues heavily dependent on government-backed programs and large hardware deliveries. The CFO noted that quarterly results will continue fluctuating with the timing of system installations and milestone-based projects, while the $8.4 million C-DAC system is still awaiting installation and acceptance testing before fourth-quarter revenue recognition. Such lumpiness limits near-term visibility and makes sustained commercial scaling difficult to predict.
Execution Risks Continue to Shadow the Technology Roadmap
Rigetti's technology roadmap also carries meaningful execution risk despite recent progress. The company's flagship 108-qubit Cepheus system still operates at roughly 99.1% two-qubit gate fidelity, with management identifying coherence time of only 25-30 microseconds as the primary constraint on further improvements. While Rigetti aims to double or triple coherence time and eventually reach about 1,000 qubits with 99.9% fidelity, those targets remain future objectives rather than proven capabilities.
RGTI’s Shares Look Overvalued
RGTI stock is currently trading at a Price/Book (P/B) ratio of 9.82, nearly double the 4.91 multiple for the Internet Software Market. While the stock trades below its 12-month median P/B ratio of 11.26, it still commands a meaningful premium to the broader industry, suggesting investors continue to price in strong long-term growth expectations despite the company's early-stage commercial business and persistent losses.
Image Source: Zacks Investment Research
One Bright Spot for Rigetti
Government Backing and Partnerships Strengthen the Roadmap
One positive for Rigetti is the growing support it is receiving from governments and strategic partners. During the second quarter, the company highlighted a U.S. Department of Commerce letter of intent for up to $100 million in CHIPS Act funding to accelerate superconducting quantum computing research. It also expanded its partnership with Hewlett Packard Enterprise and the Pittsburgh Supercomputing Center to build a hybrid quantum-classical supercomputer, while continuing deliveries for the 108-qubit C-DAC system in India.
These partnerships could help Rigetti expand its customer base across government, research and commercial markets while supporting future system deployments.
RGTI’s Sales & EPS Picture
In 2026, Rigetti is expected to experience a 257.1% improvement in revenues. On the profitability front, the company is expected to remain in loss, but estimates reflect loss per share narrowing by 70.3% year over year.
Image Source: Zacks Investment Research
How to Approach RGTI Stock
Rigetti continues to make progress on its technology roadmap, backed by growing government interest, strategic partnerships and a debt-free balance sheet with $541.3 million in cash, cash equivalents and investments to support future development.
However, the company's investment case remains challenging. Losses continue to widen as R&D spending rises, commercial adoption is still largely limited to research use cases, and revenue remains dependent on the timing of large system deliveries and government-funded contracts. The proposed up to $100 million Department of Commerce funding also remains subject to a definitive agreement, adding another layer of uncertainty.
With a Zacks Rank #5 (Strong Sell), we believe investors should remain on the sidelines until Rigetti demonstrates stronger commercial execution, more consistent revenue generation and continued improvements in system performance.
View the Zacks #1 Rank List
Image: Bigstock
Rising Losses Weigh on Rigetti's Outlook: Sell or Hold RGTI Stock Now?
Key Takeaways
Rigetti Computing (RGTI - Free Report) shares have remained under pressure over the past month as investors continue to question the pace at which quantum computing companies can convert technological milestones into sustainable commercial growth.
RGTI stock has lost 10.5% over the past month, underperforming both the broader market and several of its closest peers. During the same period, shares of IonQ (IONQ - Free Report) and Quantum Computing Inc. (QUBT - Free Report) lost 4.9% and 8%, respectively. The divergence highlights continued investor skepticism toward Rigetti even as it promotes progress on its quantum computing roadmap.
The company's second-quarter results did little to change that narrative. Although revenues jumped year over year on Novera system sales, widening operating losses, higher research spending and a business still heavily dependent on milestone-based government and system contracts reinforced concerns that meaningful commercial adoption remains a long way off.
Image Source: Zacks Investment Research
What's Weighing on Rigetti's Investment Story?
Mounting Losses Continue to Outpace Revenue Gains
Rigetti's impressive second-quarter revenue growth did little to ease concerns around its cost structure. While revenues climbed 185.3% year over year to $5.1 million, operating expenses surged 48% to $30.3 million, due to heavier spending on engineering, chip design, fabrication and refrigeration infrastructure. The widening cost base pushed operating loss to $28.1 million from $19.9 million a year ago, underscoring that profitability remains elusive despite stronger hardware sales.
The company is also signaling that spending will remain elevated. Management expects higher capital expenditures throughout 2026 as it continues investing in Fab-1 and dilution refrigeration capacity to support future generations of quantum processors rather than near-term revenue optimization. That approach may strengthen the long-term roadmap, but it also suggests investors could face prolonged cash burn before meaningful operating leverage emerges.
Commercial Adoption Still Remains a Long-Term Story
A more pressing challenge is that Rigetti's commercial business is still at an early stage. Management acknowledged that most customers continue using its quantum systems for research, algorithm development and experimentation instead of practical production workloads. The company also reiterated that achieving commercially meaningful applications still requires reaching roughly 1,000 physical qubits, higher 99.9% two-qubit fidelity and better error mitigation, goals that remain several years away.
That leaves revenues heavily dependent on government-backed programs and large hardware deliveries. The CFO noted that quarterly results will continue fluctuating with the timing of system installations and milestone-based projects, while the $8.4 million C-DAC system is still awaiting installation and acceptance testing before fourth-quarter revenue recognition. Such lumpiness limits near-term visibility and makes sustained commercial scaling difficult to predict.
Execution Risks Continue to Shadow the Technology Roadmap
Rigetti's technology roadmap also carries meaningful execution risk despite recent progress. The company's flagship 108-qubit Cepheus system still operates at roughly 99.1% two-qubit gate fidelity, with management identifying coherence time of only 25-30 microseconds as the primary constraint on further improvements. While Rigetti aims to double or triple coherence time and eventually reach about 1,000 qubits with 99.9% fidelity, those targets remain future objectives rather than proven capabilities.
RGTI’s Shares Look Overvalued
RGTI stock is currently trading at a Price/Book (P/B) ratio of 9.82, nearly double the 4.91 multiple for the Internet Software Market. While the stock trades below its 12-month median P/B ratio of 11.26, it still commands a meaningful premium to the broader industry, suggesting investors continue to price in strong long-term growth expectations despite the company's early-stage commercial business and persistent losses.
Image Source: Zacks Investment Research
One Bright Spot for Rigetti
Government Backing and Partnerships Strengthen the Roadmap
One positive for Rigetti is the growing support it is receiving from governments and strategic partners. During the second quarter, the company highlighted a U.S. Department of Commerce letter of intent for up to $100 million in CHIPS Act funding to accelerate superconducting quantum computing research. It also expanded its partnership with Hewlett Packard Enterprise and the Pittsburgh Supercomputing Center to build a hybrid quantum-classical supercomputer, while continuing deliveries for the 108-qubit C-DAC system in India.
These partnerships could help Rigetti expand its customer base across government, research and commercial markets while supporting future system deployments.
RGTI’s Sales & EPS Picture
In 2026, Rigetti is expected to experience a 257.1% improvement in revenues. On the profitability front, the company is expected to remain in loss, but estimates reflect loss per share narrowing by 70.3% year over year.
Image Source: Zacks Investment Research
How to Approach RGTI Stock
Rigetti continues to make progress on its technology roadmap, backed by growing government interest, strategic partnerships and a debt-free balance sheet with $541.3 million in cash, cash equivalents and investments to support future development.
However, the company's investment case remains challenging. Losses continue to widen as R&D spending rises, commercial adoption is still largely limited to research use cases, and revenue remains dependent on the timing of large system deliveries and government-funded contracts. The proposed up to $100 million Department of Commerce funding also remains subject to a definitive agreement, adding another layer of uncertainty.
With a Zacks Rank #5 (Strong Sell), we believe investors should remain on the sidelines until Rigetti demonstrates stronger commercial execution, more consistent revenue generation and continued improvements in system performance.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.