Rigetti's Stock Rally Driven by Partnerships, But Fundamental Risks Loom Large

What happened

Rigetti Computing stock soared over 45% in 2025 and has continued gaining in early 2026, attributed to partnerships with the Air Force Research Lab and Nvidia that spurred market optimism. However, SEC filings from late 2025 reveal revenues remain minuscule at under $2 million per quarter, with operating losses exceeding $20 million and a reliance on lumpy government contracts. The company's valuation has ballooned to over $8 billion, trading at 770x trailing revenue and 13.6x book value, despite no clear path to profitability in the near term. Market sentiment has shifted from hype-driven rallies to growing skepticism, with analysts downgrading the stock due to execution risks and stretched valuations. While a strong cash position of ~$600 million provides runway, the stock's performance is increasingly disconnected from fundamental business progress and technical milestone deliveries.

Implication

The recent stock gains are likely unsustainable, given Rigetti's lack of revenue scale and ongoing heavy operating losses exceeding $80 million annually. Partnerships with entities like the Air Force Research Lab and Nvidia, while enhancing strategic positioning, do not immediately translate into significant commercial revenue or alter the dependency on government funding. With extreme valuation multiples and negative earnings, the equity functions as a high-risk call option on unproven technical milestones, offering no margin of safety for downside risks such as roadmap delays. Any slippage in delivering the 100+ qubit system or failure to expand beyond initial Novera orders could trigger sharp corrections as sentiment normalizes, especially given the crowded and volatile trading environment. Long-term investors should wait for clear evidence of revenue diversification and sustained growth, ideally seeking entry at lower valuations aligned with the DeepValue report's attractive entry point of $10, to mitigate capital impairment risks.

Thesis delta

The investment thesis remains unchanged: Rigetti is a high-risk speculative play with extreme valuation and minimal near-term commercial traction. The new partnerships confirm strategic relevance but do not address the core issues of overvaluation, revenue stagnation, or execution risks highlighted in the DeepValue report. Investors should maintain a cautious stance, avoiding the stock until demonstrable revenue growth and milestone achievements reduce the disconnect between price and fundamentals.