Rigetti Computing: Bullish Momentum Meets Caution Amid Overvaluation and Market Speculation

Technical Analysis

Rigetti Computing, Inc. (RGTI) closed at $14.02 on May 23, 2025, marking a 1.15% gain from the previous session. The stock traded in a range of $12.77 to $14.69 during the day, approaching near-term support at $13.86 and currently above the stop-loss level set around $13.58. The RSI of 69 indicates the stock is nearing overbought territory, suggesting a potential short-term consolidation or minor pullback could emerge. The 50-day and 200-day moving averages, at $9.57 and $6.46 respectively, confirm a strong upward trend that has accelerated in recent months. The MACD is positive at 0.94, reinforcing bullish momentum. However, the high ATR of approximately $9.24 indicates significant price volatility, which could impact intraday and short-term price swings. No defined resistance level further fuels the possibility of upward movement, though speculative risk remains given the volatility.

For the next trading day (May 27), the stock is likely to maintain its upward momentum or trade sideways near current levels, pending broader tech sector trends and investor sentiment post-weekend. Over the upcoming week, it may experience a moderate pullback or consolidation due to RSI nearing overbought, acting as a natural correction before any subsequent rally.

Fundamental Analysis

Rigetti Computing’s market capitalization stands at approximately $4.07 billion, reflective of its status as a mid-cap quantum computing firm riding significant investor enthusiasm. Its trailing twelve months (TTM) earnings per share (EPS) is negative at -$0.80, and the price-to-earnings (P/E) ratio is negative, indicating the company is unprofitable and reliant on growth expectations rather than current earnings. The discounted cash flow (DCF) valuation is negative (-2.50), suggesting intrinsic valuation currently below its market price; this points to an overvaluation relative to fundamental cash flow generation.

Analyst consensus indicates a ‘Buy’ sentiment, with three analysts favoring purchase, one holding, and none recommending sell. Price targets, however, range from $2 to $4, substantially lower than the current price, implying high premium pricing based on speculative future growth rather than present financial metrics.

Recent news highlights the sector-wide surge driven by speculative interest in quantum computing technologies with no immediate breakthrough news or business developments affecting Rigetti specifically. The stock has appreciated roughly 943% year-over-year, indicating strong speculative momentum but also elevated risk due to the company’s developmental stage and lack of steady cash flow.

Intrinsic Value and Long-term Investment Potential

Given the negative DCF and EPS, Rigetti currently trades at a premium to its intrinsic value based on fundamental cash flow and profitability metrics. The long-term investment thesis hinges heavily on the transformative potential of quantum computing, where Rigetti positions itself as a key innovator. However, the path to profitability remains uncertain and dependent on technological advancements, successful commercial deployment, and market adoption within the next several years.

Investors with a long horizon may find appeal in intrinsic technology and growth potential but must be prepared for considerable volatility, dilution risk, and extended timelines before profitability. The steep recent appreciation signals that much of the optimism may already be priced in, requiring continued innovation and execution to justify current valuations.

Overall Evaluation

Rigetti Computing presents as a speculative growth asset with strong bullish technical momentum and enthusiastic market interest in the quantum computing sector. However, fundamental metrics point to overvaluation with negative earnings, negative cash flow valuation, and wide price targets substantially below current levels. The elevated RSI and volatility suggest short-term caution.

Given these factors, the stock categorizes as a Hold for investors monitoring sector developments and growth potential but with caution given the speculative nature and current stretched valuations. Near-term price action may see consolidation or minor pullback, while long-term upside depends on successful technology commercialization and profitability achievements.