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Shares of quantum computing company Rigetti Computing (NASDAQ: RGTI) were up a mind-blowing 400.3% during December, according to data provided by S&P Global Market Intelligence. The company updated its roadmap in November, which seems to have served as an early catalyst. Then on Dec. 9, Alphabet's Google announced a quantum breakthrough that exhilarated the investing community about the potential of quantum computing generally.
Therefore, there truly have been developments in the world of quantum computers, but this hasn't necessarily trickled down to something material for Rigetti Computing's financials yet. In fact, its revenue through the first three quarters of 2024 is down compared to 2023.
This situation is consequently fragile -- Rigetti stock is flying high but its fundamentals have yet to improve. And on Jan. 7, investors were shown just how delicate this can be. Nvidia CEO Jensen Huang said at the CES trade show that it will likely be somewhere around 20 years before there are "very useful quantum computers."
Immediately after Huang's comments, quantum computing stocks -- including Rigetti -- dramatically plunged. This is the problem when the narrative gets too far ahead of the business fundamentals.
Why don't we all just use quantum computers now?
Quantum computers make mistakes. They operate using qubits, which are extremely sensitive and hard to read. Whereas a classical computer has an error rate of 1 per 1 billion billion, top quantum computing companies are hoping to get their error rates down to 1 per 1 million.
Until the error rate dramatically improves, the use of quantum computers will be limited, which is the point that Huang is making. Granted, Google's new chip, Willow, is a step forward because it allows the quantum computer to correct itself. By contrast, classical computers commonly run error-correcting algorithms today.
According to Fortune Business Insights, the quantum computing addressable market is predicted to grow at roughly a 35% compound annual rate through 2032, which is why investors are excited about the potential of Rigetti stock and sent it higher in December. But it's important to remember that the space needs to still have more breakthroughs to become commercially viable at scale.
What's next for Rigetti stock?
Rigetti has roughly a $2 billion market cap -- as of this writing, Rigetti stock is dropping fast so it's hard to give a more precise number. That's still small compared to the long-term market opportunity.
Rigetti's roadmap update in November was truly inspirational. It plans to release a 36 qubit system by mid-2025, a 100 qubit system by the end of 2025, and a 336 qubit system after that. Each of these milestones represents a massive increase in computational power from the previous iteration.