This Quantum Computing Stock Soared Over 30% In May. Is It a Buy Now?

Industry Overview - Quantum computing stocks are currently among the hottest on Wall Street, surpassing even AI stocks in interest [1] - The potential for rapid returns exists if quantum computing technology becomes viable and mainstream [1] Company Analysis: Rigetti Computing - Rigetti Computing's stock rose over 30% in May, peaking at over 50% increase during the month, indicating strong market interest [2] - Despite the recent gains, Rigetti's stock is down approximately 40% from its all-time high in early January, reflecting the volatility and hype surrounding quantum computing stocks [4] - The company is developing a full-stack quantum computing solution, competing against both start-ups and major players like Microsoft and Alphabet [4] - Rigetti has achieved about 99% fidelity in its chip architectures, which is competitive within the industry [6] - The company plans to release a four-chip, 36-qubit system by 2025, although widespread adoption of quantum computing is still years away [6] Market Opportunity - Rigetti projects a market opportunity for quantum computing of $1 billion to $2 billion before 2030, with significant growth expected to $15 billion to $30 billion by 2040 [7] - The long-term nature of this market opportunity raises questions about the timing for serious investments in Rigetti [7] Financial Position - Rigetti's current valuation stands at $3.5 billion, despite generating only around $9.2 million in contracts, indicating a high-risk investment profile [7] - The company is unprofitable and has agreed to sell up to $350 million in new shares to bolster its cash reserves for research and development [7][8] - The issuance of new shares dilutes existing shareholders, a recurring issue for Rigetti [8] Investment Considerations - Rigetti Computing is characterized as a high-risk, high-reward stock, with significant success already priced into its valuation [7][10] - Investors may consider smaller position sizes to mitigate potential losses while still allowing for growth if the stock performs well [10] - The uncertainty surrounding Rigetti's future performance suggests a cautious approach to investment in the company at this time [10]