Rigetti Set to Report Q3 Earnings: Buy, Sell or Hold the Stock?

Core Viewpoint - Rigetti Computing (RGTI) is expected to report third-quarter 2024 results on November 12, with projected revenues of $33.33 million, reflecting a year-over-year growth of 7.07% and an anticipated loss of 8 cents per share, indicating a 38.46% increase from the previous year's quarter [1]. Company Performance and Developments - Rigetti's focus on high-fidelity Quantum Processor Units (QPUs) and expanding market presence through partnerships and customer acquisitions, especially in government and international markets, is expected to drive growth in the upcoming quarter [3]. - The company achieved a 99.3% median 2-qubit gate fidelity on its 9-qubit Ankaa class quantum system in Q2 2024, which is a significant advancement towards deploying the 84-qubit Ankaa 3 system by year-end [4]. - The strong performance of Rigetti's 24-qubit system, with a 99% fidelity rate and rapid gate speeds of 60-80 nanoseconds, is likely to attract more partners and customers, enhancing market presence and revenue growth [5]. - Rigetti's sale of the Novera QPU to Horizon Quantum Computing in Q2 2024 demonstrates its ability to generate revenue through product sales, with expectations of more sales and potential new contracts aiding revenues in Q3 [6]. Market Position and Comparisons - Rigetti shares have underperformed compared to the Zacks Computer & Technology sector and peers like Salesforce, IBM, and Alphabet, with a year-to-date return of 14.8% versus 48%, 30.7%, and 29.4% respectively [7]. - The stock has also underperformed the Zacks Computer - Software industry, which has returned 24.9% year-to-date, and is trading at a forward 12-month Price/Sales ratio of 11.93X, higher than the sector's 7.95X [8]. Industry Outlook - The quantum computing market is projected to grow at a CAGR of 20.1% from 2024 to 2030, presenting growth opportunities for Rigetti [10]. - Rigetti's recent collaboration with Riverlane demonstrated real-time, low-latency quantum error correction on its 84-qubit Ankaa-2 system, marking progress towards fault-tolerant quantum computing [11]. - The company announced a novel chip fabrication process that enhances qubit frequency targeting, which is expected to improve quantum computing performance [12]. - Rigetti's modular chip architecture allows for efficient scaling by linking multiple identical chips, positioning the company to meet increasing market demand for scalable quantum systems [13].