Rigetti Computing (NASDAQ: RGTI) saw its shares decline 5.13% on Tuesday to close at $25.07, reversing course after a sharp two-day rally fueled by news of potential U.S. government funding for quantum technology. The stock had soared 30.57% on May 21 and another 19.87% on May 22 following the U.S. Department of Commerce's announcement of letters of intent for $2.013 billion in incentives under the CHIPS and Science Act. Premarket trading on Wednesday indicated further softness, with shares dipping to around $24.50.
New Manufacturing and Technical Milestones
Despite the pullback, Rigetti continued to advance its operational capabilities. Oxford Instruments Plasma Technology disclosed that Rigetti had purchased a PlasmaPro 100 Cobra atomic layer etch tool, a critical piece of equipment for fabricating quantum devices by removing material layer by layer at the chip level. CEO Subodh Kulkarni emphasized that the company's in-house foundry approach enables a shift "from prototypes to production, in weeks, rather than months."
In a separate development, Quantum Machines reported that it had operated Rigetti's Novera superconducting quantum chip at a median two-qubit gate fidelity of 99.5%. Gate fidelity measures the accuracy of quantum operations, with higher percentages indicating fewer errors. Yonatan Cohen, CTO of Quantum Machines, noted that this achievement demonstrates superconducting processors in the field can reach "a very high level" when paired with their control system.
Policy Boost and Market Context
The hardware and partnership updates came on the heels of the Commerce Department's announcement that it had issued letters of intent for CHIPS Act funding, including up to $100 million specifically for Rigetti's work on superconducting quantum technology. The proposed award would be distributed over three years, with the U.S. government receiving an equity stake proportional to the funding. Kulkarni stated the money would help the company "tackle key scaling bottlenecks more rapidly," referring to the challenge of expanding quantum systems without accumulating errors.
The broader quantum sector also experienced a boost from the government's actions. The funding package included $1 billion for IBM, $375 million for GlobalFoundries, and approximately $100 million each for D-Wave Systems and Infleqtion. Meanwhile, Quantinuum, backed by Honeywell, announced plans for a U.S. IPO targeting a valuation of up to $12.7 billion, listing on Nasdaq under the symbol QNT. The Defiance Quantum ETF (TICKER: QQQ) surpassed $5 billion in assets, reflecting growing investor interest in the space.
Financial Fundamentals and Risks
Rigetti's financial profile remains modest relative to its market capitalization. First-quarter revenue was $4.4 million, with an operating loss of $26.0 million. The company held $569.0 million in cash, cash equivalents, and available-for-sale investments as of March 31. Its 108-qubit Cepheus-1-108Q machine is now accessible via Rigetti QCS, Amazon Braket, Microsoft Azure Quantum, and qBraid.
However, several risks persist. The Commerce Department's letter of intent is not a final funding agreement, and the company faces uncertainties regarding the timing and terms of any definitive award, including potential dilution from securities issued to the government. Additionally, quantum computers continue to grapple with high error rates that limit practical applications, a challenge highlighted by Reuters as a significant sector-wide issue.
Rigetti's stock decline on Tuesday stood in contrast to broader market gains. The Nasdaq Composite rose 1.2% to 26,656.18, and the S&P 500 added 0.6% as trading resumed after the Memorial Day holiday. For Rigetti, the path forward hinges on translating policy support and technological progress into concrete contracts and revenue growth that can justify its multibillion-dollar market valuation.
