Quantum Computing Boom: How Citadel's Latest Moves Signal Wall Street Confidence in Rigetti and D-Wave Despite Valuation Concerns

The Institutional Play Behind Quantum Computing’s Meteoric Rise

The quantum computing sector has captured Wall Street’s attention, with two emerging players drawing particular interest from major investors. Citadel Advisors, the hedge fund helmed by billionaire Ken Griffin, recently added positions in quantum computing stocks that have delivered stunning returns. Rigetti Computing has surged 3,750% since early 2023, while D-Wave Quantum jumped 1,770% since January 2024—moves that reflect both speculative fervor and genuine technological progress in this nascent field.

Griffin’s fund, known for its disciplined investment approach and consistent outperformance of the S&P 500, acquired modest stakes in both companies during Q3. While these holdings remain small, they’re noteworthy because every Wall Street analyst covering the sector expects further appreciation. The question isn’t whether quantum computing matters, but whether these valuations can be justified.

Two Different Paths to Quantum: Rigetti’s Vertical Integration vs. D-Wave’s Specialization

Rigetti Computing’s Superconducting Advantage

Rigetti has carved a differentiated position through vertical integration and multi-chip architecture. The company manufactures its own superconducting quantum processors and controls its entire stack—from hardware to software to cloud infrastructure. This end-to-end approach generates cost efficiencies and positions Rigetti to scale faster than competitors.

The seven analysts tracking Rigetti project 42% median upside, with price targets clustering around $40 versus the current $28 level. The highest bull case targets $51, implying 82% gains. Even the most cautious forecast at $35 suggests 25% appreciation. These forecasts reflect genuine technological achievement, but they obscure a troubling reality: Rigetti’s price-to-sales ratio of 1,080 dwarfs every S&P 500 stock, including the notoriously expensive Palantir. This valuation disconnect suggests a potential 80-90% correction lies ahead.

D-Wave’s Quantum Annealing Niche

D-Wave takes the alternative route—quantum annealers instead of gate-based systems. This approach excels at optimization problems but cannot run most quantum algorithms. The tradeoff is pragmatic: D-Wave’s 4,000+ physical qubit systems deliver utility today, while Rigetti won’t contemplate 1,000-qubit architectures until 2027.

Among 11 covering analysts, the median D-Wave target price is $40, implying 48% upside from $27. The bull case reaches $48 (77% upside), while even bears see $35 (30% upside). Revenue growth accelerated dramatically—Q3 revenue doubled to $3.7 million—but the company burned through $18.1 million in non-GAAP net losses. D-Wave has offset repeated losses through aggressive equity dilution, expanding share count 31% this year alone.

Yet valuation remains the Achilles heel. D-Wave trades at 325 times sales—cheaper than Rigetti but still indefensible against a quantum computing market projected to grow just 21% annually through 2030. The technology will mature, but current pricing suggests an 80-90% decline before quantum computing reaches commercial viability.

The Reality Check: Why Quantum Computing Stocks Trade Ahead of Reality

Quantum computing remains a promising frontier, yet useful fault-tolerant systems capable of solving commercially meaningful problems remain one or two decades away. Market forecasts suggest the entire quantum computing opportunity will be 450 times smaller than artificial intelligence by 2030—context that contextualizes the speculative premium embedded in today’s valuations.

Both Rigetti and D-Wave represent genuine innovation in quantum computing, which is why Wall Street maintains positive stances. However, innovation and valuation are distinct questions. Investors intrigued by quantum computing’s long-term potential should either wait for substantially lower entry points or maintain only token positions.