Rigetti Computing Surges 9.17% Amid Technical Strength, But Fundamental Challenges Persist

Technical Analysis

Rigetti Computing (RGTI) closed at $11.55 on May 12, 2025, up 9.17% from the prior day, showing strong intraday recovery from a low of $11.08 to a high of $11.98. The 14-day RSI at 71 signals an overbought condition, suggesting potential for short-term profit-taking or consolidation. The volume of 78.43 million notably exceeded the average volume of 48.18 million, indicating elevated trader interest and momentum. The stock trades well above its 50-day ($8.90) and 200-day ($5.89) moving averages, reinforcing a bullish medium-to-long-term trend. MACD remains positive at 0.40, confirming upward momentum. Short-term support lies near $11.47 with immediate resistance at $11.81; a decisive break above resistance would confirm continuation. The average true range (ATR) is elevated at 7.85, reflecting high volatility which could produce wide daily price swings. A stop-loss threshold near $11.14 is relevant to limit downside risk.

For the next trading day (May 13), the elevated RSI and recent price surge indicate possible cautious trading, with the stock likely to consolidate or slightly pull back toward support before attempting another breakout over $11.81. Over the upcoming week, if volume remains strong and sector sentiment stabilizes, RGTI could test the $12-$13 range; failure to hold $11.47 would introduce downside risk toward $11 or lower.

Fundamental Analysis

Rigetti Computing remains unprofitable with a trailing twelve months (TTM) EPS of -$1.09 and a negative P/E of -10.60, reflecting ongoing losses. The recent Q1 2025 earnings revealed a loss of $0.08 per share, worse than consensus estimates, alongside revenue growth deceleration and rapid share dilution, raising concerns about financial health and shareholder value erosion. Cash reserves of approximately $200 million provide a cushion but are weighed down by a high cash burn rate. The discounted cash flow (DCF) valuation is negative at -$2.49, signaling that intrinsic value, based strictly on cash flow expectations, remains below current market price.

Sector competition intensifies with large incumbents like IBM and aggressive newcomers such as IonQ, complicating Rigetti’s scalability and market share growth. Consensus analyst targets range between $2 and $4, considerably below today’s trading price, reflecting skepticism about near-term fundamental improvement. The consensus analyst sentiment is modestly bullish with three buy and one hold rating, but high valuation multiples and unmet earnings targets temper enthusiasm.

Intrinsic Value and Long-Term Prospects

The current price well surpasses consensus target prices and intrinsic value estimates derived from DCF analysis. This premium price appears driven more by speculative enthusiasm about quantum computing’s future than by firm current earnings or cash flow fundamentals. Long-term investment potential hinges on Rigetti’s ability to successfully commercialize quantum technologies and achieve sustainable revenue growth while managing share dilution and cash burn. If milestones in technology scalability and partnerships materialize, significant upside could follow, but these catalysts remain uncertain and time-consuming. The high-risk profile and lack of profitability emphasize that intrinsic value is still distant from current market pricing.

Overall Evaluation

Given the stretched technical indicators, significant fundamental challenges, and uncertain intrinsic valuation, Rigetti Computing aligns more with a Hold candidate at present. The stock demonstrates strong short-term momentum but is overbought, highly volatile, and priced significantly above intrinsic measures. Investors prioritizing growth and technology leadership may find interest in its potential, but the elevated risk and profit erosion warrant caution. Any new technological breakthroughs or improved quarterly results after the August earnings announcement will be critical in reassessing the stock's trajectory. Until then, the technical strength is tempered by fundamental weaknesses and modest analyst expectations.