With shares up 223% year to date, Rigetti computers (NASDAQ: RGTI) rising as Wall Street becomes more interested in quantum computing. While this industry is less flashy than other hype cycles like generative artificial intelligence (AI), it could be just as impactful in the long run. Let’s dig deeper to decide if Rigetti is a potential millionaire maker.
Quantum computers are computers that use quantum mechanics to solve problems much faster than their traditional alternatives. While the industry still exists largely in the research and development phase, McKinsey analysts estimate that this could add $1.3 trillion in value to the economy by 2035. is expected to come from applications such as pharmaceutical development and materials science.
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The analysts also believe that quantum computers could play a role in training AI algorithms and neural networks, making this industry an exciting way to gain indirect exposure to the red hot one options such as major language models (LLMs) or self-driving cars.
In the best case, Rigetti Computing could be the solution Nvidia of quantum computing due to its pick-and-shovels business model. Like the legendary chipmaker, Rigetti is serving the infrastructure side of this opportunity by building quantum computers and their key hardware components such as processors. The company has also developed its Quantum Cloud Services (QCS) platform designed to give customers remote access to its quantum processors via the cloud.
Rigetti designed QCS to integrate with traditional computer hardware, making it easier for customers to access the technology. Naturally, this can provide huge cost savings for a customer compared to building their own quantum computing capabilities in-house.
By going public through a reverse merger with a special-target acquisition company (SPAC), Rigetti could list a special one early phase of its activities. Third quarter revenue fell 23% year over year to $2.4 million. And while the company generated a gross profit of $1.2 million, it recorded an operating loss of $17.3 million, after taking into account important outflows such as research, development and office salaries.
It’s getting worse. Rigetti spent a whopping $9.7 million on it share-based compensation this year. While this technique can save money and motivate employees, it dilutes shareholders by increasing the number of shares outstanding and reducing their claims on future earnings or cash flow.
