The quantum computing sector, a focal point of investor enthusiasm throughout 2025, is facing renewed scrutiny. Rigetti Computing, a prominent player whose shares have soared over 200% year-to-date, finds itself at the center of this reassessment following a cautious initiation report from a major investment bank.
Analyst Initiation Applies the Brakes
Jefferies has commenced coverage of Rigetti with a “Hold” rating and a price target of $30 per share. While this target implies modest upside from previous closing levels, the stance is notably more restrained than other recent analyst actions. The bank’s strategist, Kevin Garrigan, acknowledged the long-term structural potential of quantum computing but highlighted significant execution risks.
The analysis pinpointed recurring delays in Rigetti’s technical roadmap and a heavy reliance on government contracts as primary concerns. Jefferies’ position effectively signals a desire to see more concrete operational progress before adopting a more bullish stance. This caution stands in stark contrast to the view from Mizuho, which just days earlier initiated with an “Outperform” rating and a $50 price target—nearly double the upside potential Jefferies now projects.
Soaring Expectations Meet Ground-Level Fundamentals
The analyst’s tempered outlook arrives amid already tense market conditions for Rigetti. The company currently commands a market capitalization of approximately $7.8 billion. This valuation is juxtaposed against revenue for the past twelve months, which landed between just $7.5 million and $10.8 million.
These figures result in a price-to-sales multiple exceeding 900—a level that demands virtually flawless execution and explosive growth. Jefferies’ critique centers on this very disconnect: while the technological narrative remains compelling, the bank questions whether the company can meet the perfection already priced into its stock in the near term.
This gap between expectation and reality is reflected in recent trading. The shares experienced a sharp pullback of almost 9% in the prior session, with the new analyst note adding further pressure. From a European perspective, the stock, trading near €20.10, is hovering just above its recent 52-week low and remains almost 60% below its October peak.
Should investors sell immediately? Or is it worth buying Rigetti?
The Quantum Rally Faces a Stress Test
Rigetti’s volatility cannot be viewed in isolation. The entire quantum sector has enjoyed a powerful rally, fueled by hopes that quantum processors could become the next major leap for demanding AI applications, following classical GPUs. However, evidence is mounting that the market may have gotten ahead of itself.
The sector is now being viewed with increasing skepticism. While competitors like D-Wave Quantum have benefited from heightened government interest, the broader “quantum basket” is under more critical examination. Commentators, including those at The Motley Fool, openly discuss bubble risks, noting that widespread commercial deployment of quantum solutions is likely years away, unlike generative AI chips which are already generating substantial revenue.
Furthermore, Rigetti’s revenue structure presents a specific challenge. Its pronounced dependence on the public sector provides a degree of stability but simultaneously limits near-term scaling potential. Other providers, such as IonQ, are pursuing commercial enterprise clients more aggressively, which offers a path to faster revenue growth but comes with a different risk profile.
Outlook: High Volatility and Divergent Views
Market participants are likely to focus on two key areas in the coming weeks. First, technical support will be tested, particularly whether Rigetti can maintain its footing in the mid-$20 range in the U.S. and above its recent annual low in Europe. Second, all eyes will be on the company’s operational progress ahead of the next quarterly report.
An additional factor is the elevated short interest, which stands at roughly 13.45%. This setup can amplify price movements in either direction: positive news could trigger a short squeeze, while operational setbacks would likely intensify selling pressure.
The analyst landscape remains divided. Jefferies’ $30 target represents the cautious end of the spectrum, contrasting with the average price target of approximately $40.38 and Mizuho’s $50 objective. This wide range of assessments frames the ongoing narrative for a highly volatile stock and underscores that for Rigetti, the current debate is less about its technology and more about its demanding valuation.
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