Quantum Computing Stocks: Why EPS Beats and R&D Milestones Matter More Than Revenue in Early-Stage Tech Plays

The quantum computing sector is a land of paradoxes: firms burn cash on research, report minuscule revenues, yet command billion-dollar valuations. For investors, the question is clear: How do you value companies that prioritize moonshot innovation over near-term profitability?

Take Quantum Computing Inc. (NASDAQ: QUBT) and Rigetti Computing (NYSE: RGTI). Both recently reported Q1 2025 earnings that highlight this tension. While QUBT’s stock rose 3.7% after-hours despite a revenue miss, Rigetti’s shares plunged 13%, even after an EPS beat. The divergence reveals a critical truth: in early-stage tech, investors reward companies that deliver strategic milestones and non-operational profitability, even if revenue falters.

QUBT: The Case for EPS Beats and Strategic Momentum

QUBT’s Q1 results were a study in contrasts. Revenue of $39,000 fell far short of estimates, yet its adjusted EPS of $0.11 beat expectations by $0.16. The EPS surge stemmed from a $23.6 million non-cash gain tied to its 2022 merger—a one-time boost. But the real story lies elsewhere:

1. Foundry Completion: The company finished its Quantum Photonic Chip Foundry in Tempe, Arizona, which will mass-produce thin-film lithium niobate (TFLN) chips. Five initial purchase orders underscore early demand.
2. Strategic Contracts: A $406,000 subcontract with NASA and sales to institutions like Delft University validate its commercial traction.
3. Balance Sheet Strength: A $93.6 million private placement boosted cash reserves to $166.4 million, funding future scaling.

Critics will note QUBT’s razor-thin margins and rising operational losses ($8.3 million vs. $6.3 million in 2024). Yet investors are betting on future revenue acceleration: Foundry revenue is expected to ramp in 2026, while partnerships like its work with NASA’s LIDAR project signal a pipeline of government-funded projects.

Rigetti: The Risks of Overemphasizing Revenue

Rigetti’s stumble offers a cautionary tale. While its Q1 net income hit $42.6 million (driven by a $62 million non-cash gain), revenue collapsed 50% year-over-year to $1.5 million. Gross margins cratered to 30% from 49%, and its stock fell 13% post-earnings.

The disconnect? Rigetti’s investors are demanding tangible revenue growth, not just R&D breakthroughs. Despite milestones like its hybrid microwave-optical qubit control technology and DARPA-funded projects, the company’s reliance on government grants and academic partnerships leaves its revenue volatile. Without a clear path to recurring commercial sales, its stock remains hostage to short-term misses.

Why EPS and R&D Matter More in Quantum Computing

Quantum computing’s timeline demands a long view. Analysts estimate “quantum advantage” (outperforming classical systems) is 4–5 years away, requiring sustained R&D investment. In this phase, companies must prioritize:

• Non-operational profitability: Non-cash gains (e.g., warrant liability revaluations) provide liquidity for scaling.
• Strategic partnerships: Government contracts and academic collaborations validate technical leadership.
• Milestone-driven execution: Foundry completion, chip fabrication advancements, and customer orders signal progress toward commercialization.

QUBT’s focus aligns with this strategy. Its TFLN foundry and NASA partnership are revenue catalysts-in-waiting, while its cash reserves buy time for execution. Rigetti, meanwhile, lacks a clear revenue playbook, relying instead on unpredictable grant funding and academic sales.

The Investment Thesis: QUBT as a Speculative Buy

For investors with a 3–5 year horizon, QUBT offers asymmetric upside:

• Catalysts: Foundry revenue ramp-up, automotive industry adoption of its EmuCore reservoir computing devices, and federal contracts.
• Risk Factors: Operational losses could strain liquidity; competition from rivals like IBM and Google.
• Valuation: At $9.24 per share, the stock trades at a 51% discount to its $14 price target.

Rigetti’s struggles highlight the perils of focusing on revenue in an industry still in its infancy. Investors should instead prioritize firms that:
1. Deliver R&D breakthroughs (e.g., QUBT’s photonic chips vs. Rigetti’s superconducting qubits).
2. Secure strategic partnerships to build a revenue pipeline.
3. Maintain robust cash reserves to weather losses.

Conclusion: Bet on Innovation, Not Immediate Profitability

The quantum computing race isn’t won in quarters—it’s won in decades. QUBT’s stock surge post-earnings signals investor acceptance of this reality: EPS beats and R&D milestones matter more than revenue in early-stage tech.

For bold investors willing to look past short-term misses, QUBT’s combination of technical progress and financial flexibility positions it as a speculative buy. But tread carefully: this is a high-risk, high-reward play for those who can afford to wait—and who believe quantum computing’s disruption is worth the wait.

The next five years will separate the winners from the losers. QUBT is betting it’s among the former.