Sign InRigetti Computing Shows Strong Momentum Amid Valuation Concerns: A Hold Statement
Summary
On July 18, 2025, Rigetti Computing's stock closed at $17.16 after a significant 41% surge in the past week, driven by strong bullish indicators and a technological breakthrough, yet it faces overbought conditions and fundamental valuation challenges.
Technical Analysis
Rigetti Computing (RGTI) closed at $17.16 on July 18, 2025, marginally up by 0.12%. The stock has recently exhibited strong upward momentum, having surged approximately 41% over the past week amid elevated volume of 56.23 million shares, surpassing its average volume of 52.49 million. Price volatility remains high as underscored by an average true range (ATR) near $6.97, consistent with its rapid price swings. The Relative Strength Index (RSI) at 79 indicates an overbought condition, suggesting a possible near-term pullback or consolidation. The MACD remains positive at 0.66, reflecting bullish momentum, while the price sits well above both the 50-day ($12.27) and 200-day ($8.69) moving averages, confirming a sustained uptrend. Notably, the stock trades just above a key support level near $16.56 with a stop-loss suggested at $16.66, but lacks clear defined resistance above current prices, which could imply further upside potential albeit with heightened short-term risk of volatility.
For the next trading day (July 21), given the strong momentum and low recent volatility intraday, the stock may edge slightly higher or consolidate near current levels, though RSI suggests caution against rapid spikes. Over the coming week, if no adverse news emerges, momentum could sustain moderate gains supported by elevated volume and favorable technical indicators; however, profit-taking due to the overbought signal remains a plausible risk.
Fundamental Analysis
RGTI’s market capitalization stands at approximately $5.02 billion, reflecting substantial investor interest in quantum computing innovation. However, the company’s trailing twelve-month earnings per share (EPS) remain negative at -$0.80, with a negative price-to-earnings ratio (-21.45), indicative of ongoing unprofitability typical of early-stage technology firms. The discounted cash flow (DCF) model yields a negative intrinsic value estimate (-2.40), suggesting that current cash flows and forecasts do not justify the share price under standard valuation methodologies.
Recent corporate milestones bolster Rigetti’s long-term technological prospects. The company reported a 99.5% gate fidelity on its 36-qubit chiplet system, a significant advancement toward scalable quantum systems expected by year-end 2025. This technological breakthrough could enhance future revenue generation and market positioning in quantum computing—a sector projected to expand markedly over the next decade. Nevertheless, management has indicated that meaningful commercial revenues and profitability remain approximately four years away, reinforcing a long-term horizon for value realization.
Analyst consensus per current targets centers on $18/share, closely aligned with recent prices, supported by three buy and one hold rating within the coverage universe. The stock’s recent remarkable price appreciation (~1,300% gains over the past year) indicates market enthusiasm for its innovation trajectory but also heightens valuation risk if commercial milestones delay or prove less transformative than anticipated.
Intrinsic Value and Long-term Investment Potential
Current intrinsic value measures, such as DCF, argue the stock is overvalued relative to near-term financial fundamentals. However, Rigetti’s pioneering advancements position it as a potential long-term beneficiary of the quantum computing wave. Capitalizing fully on its chiplet innovation could translate to substantial market share and revenue growth over the next 3-5 years. Investors with a high risk tolerance and belief in quantum computing’s eventual market impact may view RGTI as a speculative growth holding with multi-year appreciation potential. Conversely, those seeking stable cash flows or near-term profitability would find limited alignment with the stock’s current financial profile.
Overall Evaluation
RGTI embodies a high-risk, high-reward growth profile characterized by robust technical momentum but fundamental valuation challenges. It features strong bullish technical indicators, recent breakthrough news driving enthusiasm, and as yet unrealized commercial viability. Short-term trading may present volatility risks given RSI overbought levels, while medium to long-term prospects hinge critically on successful scaling and monetization of quantum computing technologies.
Classification: Hold
Rationale: The stock’s technical strength and breakthrough news support maintaining exposure for upside capture, while valuation disconnects and negative earnings caution against aggressive accumulation at present. A hold stance acknowledges positive momentum tempered by risks tied to financial fundamentals and execution timelines.
