Over the past year, a new subsector of artificial intelligence (AI) stocks started receiving intense investment interest. As a result, these companies saw parabolic rises in their stock price seemingly out of nowhere. What was the catalyst fueling the hype around these emerging AI players? The basic explanation is that quantum computing started gaining investment traction within the broader AI narrative.
Many big tech companies, including Amazon, Microsoft, Alphabet, and Nvidia, are developing quantum computing chips or are involved in quantum computing partnerships. Part of the growth story for these stocks is investor interest in these efforts.
While investors appear to be captivated by the idea of investing in quantum computing, some of them are looking beyond the usual "Magnificent Seven" stocks. That led them to look at pure-play quantum computing companies such as IonQ(NYSE: IONQ), D-Wave Quantum(NYSE: QBTS), and Rigetti Computing(NASDAQ: RGTI). In the case of Rigetti stock, it has soared by as much as 2,750% over the last six months.
But recent short-term worries about the economy as well as specific worries raised about the development timeline for AI, and more specifically quantum computing, sparked a pullback for some of these stocks. As of the market close on March 27, shares of Rigetti are trading down by 57% from all-time highs.
Is this an opportunity to take advantage of broader selling activity among stocks in the Nasdaq Composite to buy stock in a great company at a discount? Or has Rigetti had its moment?
Analyzing Rigetti's stock price movement
In the top chart pictured below, investors can see Rigetti's stock price movement over the last year. Up until October, Rigetti was flying under the radar as an unknown penny stock.
The bottom chart shows the price action for a quantum computing-themed exchange-traded fund (ETF). Interestingly, the Defiance Quantum ETF(NASDAQ: QTUM) saw a similar surge to that of Rigetti around October of last year. It's a clear indication that the idea of investing in quantum computing stocks started to land on more radars toward the end of 2024.
While Rigetti stock saw some outsized price appreciation, the stock's rise was short-lived. For most of 2025, shares of Rigetti have been on the decline.
Let's analyze Rigetti's underlying business and valuation trends to assess if now is an opportunity to buy the dip.
Image source: Getty Images.
Is the sell-off in Rigetti Computing a buying opportunity?
With a share price of roughly $8.62, Rigetti stock looks cheap. However, smart investors know that looking at the share price doesn't provide you with a real understanding of how much a company is actually worth.
As of this writing, Rigetti Computing has a market capitalization of $2.43 billion. This is significantly below that of IonQ, and relatively in line with D-Wave Quantum. Given these dynamics, Rigetti stock may look like a better buy when compared to its peers. But the market cap on its own is also not a very good indicator of whether a stock is a bargain.
Some other metrics to consider to better judge Rigetti's valuation involve looking at the company's top- and bottom-line financials. Over the last 12 months, Rigetti Computing generated $10.8 million in revenue and had a net loss of $201 million. This shows the company is making money (some companies out there don't even accomplish this), but that its expenses are bigger than its income. A negative balance sheet isn't good, but it also isn't unusual for a growth stock.
Considering the business isn't anywhere close to profitable at the moment, an alternate way to determine if Rigetti stock is a bargain is to use a metric that analyzes its sales. Given trailing-12-month sales of $10.8 million and a market cap of $2.43 billion, Rigetti is trading at a price-to-sales (P/S) ratio of roughly 225.
Determining a bargain P/S ratio depends largely on the company and the industry. Tech stocks and growth stocks tend to sport higher P/S ratios than average (which is generally below 5), but once a P/S starts going above 25 or so, it really shouldn't be considered a bargain. A high P/S generally offers a clear indication that a stock will take a long time to justify the initial purchase price. Rigetti Computing's 225 P/S suggests that, even after a 57% share price decline, the stock has heavy valuation inflation.
Rigetti is beginning to fall out of favor with investors as they see indications that it has a long way to go before its business really scales. Furthermore, given how much cash Rigetti is burning in its effort to grow, I suspect many investors are seeking safer alternatives, especially given the uncertainty in the stock market right now.
To put it plainly, I think Rigetti Computing stock is overvalued and very much not trading for a bargain right now -- despite the appearance of a depressed share price.
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Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool's board of directors. John Mackey, former CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool's board of directors. Adam Spatacco has positions in Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool has positions in and recommends Alphabet, Amazon, Microsoft, and Nvidia. The Motley Fool recommends the following options: long January 2026 $395 calls on Microsoft and short January 2026 $405 calls on Microsoft. The Motley Fool has a disclosure policy.
