Rigetti Computing Stock's Stunning Rally Masks a Troubling Reality: Why Wall Street's Bullishness May Be Surprisingly Misleading

The Valuation Elephant in the Room

Rigetti Computing (NASDAQ: RGTI) has emerged as the market darling of the quantum computing sector, with shares catapulting 2,750% since the start of 2024. This meteoric rise has transformed a $10,000 investment into $285,000 — a performance that would make any investor’s portfolio shine. Yet beneath this glittering surface lies an uncomfortable truth that most market participants seem to be overlooking.

The company currently trades at 1,080 times sales, a valuation metric so extreme it defies historical precedent. To put this in perspective, the three priciest stocks in the S&P 500 average 60 times sales. Rigetti is literally 18 times more expensive than those already-pricey blue-chip names. No publicly traded company has ever maintained a price-to-sales ratio exceeding 100 indefinitely, let alone soaring above 1,000. This suggests the potential for a correction of 90% or more — a reality that deserves serious consideration from any prospective investor.

Why Analysts Remain Bullish (And What It Really Means)

Curiously, all seven Wall Street analysts tracking Rigetti see upside ahead. The median price target sits at $40 per share, implying 42% appreciation from the current $28 level. Even the most conservative target of $35 represents a 25% gain. This widespread optimism appears counterintuitive given the valuation extremes, revealing an important market dynamic.

These forecasts likely reflect analysts’ attempts to harness momentum rather than fundamental value. When a stock captures market enthusiasm, professionals often award inflated valuations to stay relevant to their institutional clients. The telling statistic: only seven analysts follow Rigetti, compared to 71 covering Nvidia. Most Wall Street institutions haven’t even bothered to establish formal coverage yet — a sign of how niche this security remains.

The Technology Promise Versus the Timeline Problem

Rigetti’s competitive moat rests on several legitimate advantages. The company specializes in superconducting quantum computing, where microscopic circuits cooled near absolute zero create qubits — quantum bits that operate fundamentally differently from classical binary digits. Unlike traditional bits (constrained to 1 or 0), qubits can exist in superposition, occupying a blend of both states simultaneously. They can also become entangled, linking their states across any distance.

The company’s vertical integration — controlling manufacturing, hardware, and software infrastructure — provides cost efficiencies competitors struggle to match. Additionally, Rigetti developed the first multichip QPU architecture, linking multiple quantum chiplets together in a configuration the company believes will enable fault-tolerant systems at scale.

However, this technological edge faces an inconvenient temporal barrier. Qubits remain extraordinarily sensitive to environmental interference — vibrations, temperature swings, magnetic radiation, and even adjacent qubits generate errors that corrupt quantum states. Widespread utility demands real-time error correction and systems containing 10,000 to 1 million stable qubits. Current industry consensus suggests achieving this milestone will require one or two decades of development.

Rigetti projects reaching 1,000+ qubits by 2027, which would still leave the company 10 to 1,000 times short of the scale needed for practical, commercially viable quantum computation. The applications — finance, materials science, climate modeling, logistics optimization — remain tantalizing possibilities rather than near-term realities.

The Bottom Line: Momentum Trading Versus Rational Investing

Rigetti Computing presents a paradoxical investment case. The company possesses genuine technological advantages and occupies a genuinely transformative sector. Yet current valuations bear no mathematical relationship to any reasonable earnings forecast for the next decade. Analysts’ surprisingly optimistic outlooks appear driven more by capturing short-term market momentum than by rigorous financial analysis.

For investors seeking exposure to quantum computing’s long-term potential, Rigetti may eventually deliver returns. But the current valuation suggests substantially higher near-term risk than reward — a reality that surprisingly few market participants seem willing to acknowledge.