Shares of Rigetti Computing (RGTI) soared 13.2% in premarket trading Thursday after reports emerged that the Trump administration plans to award $2 billion in grants to nine quantum-computing firms, with Rigetti receiving approximately $100 million. The news, first reported by Reuters via the Wall Street Journal, also indicates the government intends to take equity stakes in the recipient companies.
Market Reaction and Financial Context
Rigetti stock closed Wednesday at $16.88 and was quoted at $19.10 before the market opened Thursday, reflecting a sharp upward move ahead of regular Nasdaq trading. The rally comes as the company continues to defend its valuation amid mixed financial results. Rigetti reported first-quarter revenue of $4.4 million, up from $1.5 million a year earlier, but its operating loss widened to approximately $26 million. The company ended March with $569 million in cash, cash equivalents, and available-for-sale investments.
Government Funding Details
According to the report, IBM is slated to receive the largest grant at $1 billion, followed by GlobalFoundries with $375 million. D-Wave Quantum, Rigetti, and Infleqtion are each in line for $100 million. The funding is intended to accelerate development in the quantum computing sector, which has yet to achieve widespread commercial adoption. The government's equity participation suggests a deeper commitment to fostering the industry's growth.
Technological Milestones
Rigetti CEO Subodh Kulkarni highlighted the company's recent progress, noting that its 108-qubit Cepheus-1-108Q system is now available on Rigetti QCS, Amazon Braket, Microsoft Azure Quantum, and qBraid. Kulkarni emphasized growing adoption across government, academic, and commercial customers, including sales of on-premises Novera quantum processing units (QPUs). However, the effectiveness of quantum systems depends not only on qubit count but also on low error rates to produce useful results.
Analyst Perspectives and Valuation Debate
The funding news has reignited debate over Rigetti's valuation. A Yahoo Finance-linked update suggested the stock trades 31.1% below fair value, supporting a bullish outlook. Conversely, Motley Fool's Anthony Di Pizio warned that Rigetti's price-to-sales ratio remains elevated, and if progress fails to convince investors, shares could fall below $10 within a year. Cantor Fitzgerald analyst Troy Jensen maintains a Buy rating, arguing that technical metrics such as qubit fidelity and logical qubit count are more important than near-term sales.
Peer Performance and Market Sentiment
Rigetti's stock movement often mirrors that of peers like IonQ and D-Wave, with the group frequently trading as a basket. On May 18, a broad quantum-stock decline saw Rigetti and Quantum Computing Inc. each fall about 10%, attributed to profit-taking rather than company-specific news. IBM remains the largest-cap name tied to the reported government support, providing a stabilizing influence on the sector.
Risks and Challenges
Despite the positive funding news, significant risks persist. Rigetti's GAAP net income was boosted by a non-cash $53.7 million change in the fair value of derivative warrant liabilities, masking the $26 million operating loss. Delays or changes in federal funding terms could quickly reverse the rally. Additionally, Reuters noted that current quantum computers still spend most of their power on error correction, limiting their speed advantage over classical systems. Rigetti acknowledges that fault-tolerant quantum computing remains a long-term goal.
