Is Rigetti's Growth Model Too Dependent on Government Deals?

Core Insights - Rigetti Computing (RGTI) heavily relies on U.S. government contracts to fund and validate its quantum technologies, including a $1.5 million contract with the Air Force Research Lab and a $3.9 million contract with DARPA [1][6] - The company's dependence on public sector revenue raises concerns about scalability and commercial maturity, as government projects often have long procurement cycles and may not lead to high-margin contracts [2][6] - Rigetti's stock has decreased by 14.3% year-to-date, contrasting with the industry's growth of 14.7%, and it trades at a high price-to-book ratio of 18.12, indicating weak value metrics [5][8] Government Contracts and Partnerships - Rigetti has secured multiple government contracts, including a multi-year project with the Department of Energy's Superconducting Quantum Materials and Systems Center, which reinforces its status as a trusted partner in early-stage quantum research [1] - The company delivered its 84-qubit Ankaa-1 system to the DoE's Quantum Systems Accelerator, showcasing its technological capabilities [1] Comparison with Peers - IonQ has also received significant government support, including a $13.4 million contract, while successfully converting private sector pilots into active engagements, indicating a more balanced revenue stream [3] - D-Wave collaborates with various agencies and has launched pilot projects in enterprise applications, positioning itself for broader revenue flexibility compared to Rigetti [4] Financial Performance and Estimates - The Zacks Consensus Estimate for Rigetti's 2025 earnings suggests an 86.1% rise from the previous year, although the company still faces challenges in achieving commercial uptake [9][10] - Current estimates indicate negative earnings per share for the upcoming quarters, with a year-over-year growth estimate of 14.29% for the current quarter [10]