Rigetti's 2026 Plunge: A Historical Lens on Quantum Valuation Bubbles

Rigetti Computing's stock is a textbook case of extreme valuation and fragile momentum. The company's shares have plunged 70% from their 2025 highs, trading at $24.51 with a market capitalization of $8.1 billion. This dramatic sell-off has erased much of the speculative excess, but the stock remains perilously close to its all-time peak, having declined only 21% from all-time highs. This suggests the underlying momentum is still fragile, with the market holding its breath for a fundamental catalyst to justify a sustained recovery.

The core investor question is whether this level is sustainable for a company that is still pre-revenue. The answer lies in the staggering valuation metrics. Despite generating just $5.2 million in revenue during the first three quarters of 2025, Rigetti trades at a price-to-sales (P/S) ratio of 1,010. To put that in perspective, even Nvidia-a leader in high-performance computing-commands a P/S multiple of just 24. This 42-fold premium to a company with a proven, multi-billion dollar revenue stream underscores the market's current bet on future, not present, commercial success.

In practice, this valuation is a bet on a technology that remains years from scale. The company's vertically integrated model is a strength, but it is also a massive source of cash burn. Rigetti generated a net loss of $198 million in the first nine months of 2025, and its gross margin is a negative -6,849.48%. The stock's recent bounce from its lows is a classic "short squeeze" or "hope rally" pattern, not a fundamental re-rating. The setup is clear: the stock has fallen far, but the valuation still prices in perfection. For a pre-revenue company, that is a precarious place to be.

The Mechanics: Revenue Collapse Meets Unfunded Roadmap

The core of Rigetti's investment dilemma is a stark mechanical disconnect. The company is attempting to fund a capital-intensive, multi-year technology roadmap with a shrinking revenue base. For the first nine months of 2025, total revenue was a mere $5.2 million, representing a 39% year-over-year decline. This collapse in top-line performance directly undermines the financial foundation needed to support its ambitious goals.

The roadmap itself is a clear signal of the scale of the challenge. Rigetti aims to deploy a 1,000+ qubit system by or around the end of 2027. Achieving this requires continuous, massive R&D spending. Yet the company's financial results show it is burning cash at an accelerating rate. For the same nine-month period, Rigetti reported a GAAP net loss of $198 million. This loss is not a one-off; it is the direct consequence of operating in a high-cost, pre-commercialization phase where development expenses far outstrip any revenue generated.

The situation is exacerbated by the nature of its current sales. The company secured purchase orders totaling approximately $5.7 million for two 9-qubit Novera™ systems, with delivery expected in 2026. While this provides a small, forward-looking revenue stream, it is insufficient to cover the company's ongoing losses. For instance, in the third quarter alone, the operating loss was $20.5 million. The $5.7 million in future orders, spread over the first half of 2026, would not even cover a single quarter's operating loss at the current burn rate.

This creates a precarious financial dynamic. The company's cash position, while substantial at around $600 million, is being used to fund this gap between revenue and expenses. The roadmap's success is therefore not just a technical challenge but a financial one. It must achieve commercial scale before its cash reserves are depleted. The current trajectory-declining revenue, mounting losses, and a multi-year development plan-suggests a high probability of needing additional equity financing in the future. This would likely come at a dilutive cost to existing shareholders, a risk that is not reflected in the company's current, high valuation multiples.

The Risk Spine: Funding, Dilution, and the Quantum Reality Check

The quantum computing thesis is a high-wire act between today's cash burn and tomorrow's distant utility. Rigetti's financial runway is a precise, ticking clock. As of November 2025, the company held approximately $600.0 million in cash. Yet its Q3 2025 operating loss was $20.5 million. At that burn rate, the current cash pile buys just 29 quarters-or under two and a half years-of operations before hitting a critical juncture. This calculation does not include any potential increase in R&D spending required to meet its aggressive 2026-2027 roadmap, which promises a 150+ qubit system by late 2026 and a 1,000+ qubit system by late 2027. The company is burning cash to build a product that is still years from commercial relevance, creating a classic "race against the clock" scenario.

The core technology itself is the ultimate constraint. While Rigetti's roadmap is detailed, the path to a commercially useful machine is measured in decades, not quarters. Experts estimate that large-scale, fault-tolerant quantum systems capable of solving problems beyond classical computers are at least a decade away. This timeline is a direct challenge to the stock's valuation, which trades at 1,025 times sales. The market is pricing in a near-term commercial breakthrough, but the scientific reality is a slow, incremental climb. The company's recent $5.7 million in purchase orders for its 9-qubit Novera systems is a tangible revenue stream, but it is dwarfed by the scale of the investment needed to reach its 1,000+ qubit target. This creates a funding gap that will eventually require external capital.

That capital is not guaranteed. The company's recent experience with the DARPA Quantum Benchmarking Initiative (QBI) program is a stark reminder of the competitive and funding risks beyond its control. Rigetti was not initially selected for Stage B of the program, despite being engaged in Stage A. While management remains optimistic about being chosen in the coming months, this exclusion highlights that even major government partnerships are not a sure thing. It underscores the company's dependence on external validation and funding, which can be withdrawn or redirected at any time.

The bottom line is a quantum reality check. Rigetti is burning through a finite cash reserve to develop technology that is still a decade from utility. The stock's valuation is disconnected from this timeline, pricing in success before the first step is even complete. The predicted plunge is not a market whim but a logical consequence of this mismatch. When the next earnings report shows the cash burn accelerating without a corresponding leap in near-term revenue, or when a key partnership like DARPA's is definitively lost, the disconnect between the stock price and the underlying financial and technological reality will become impossible to ignore.

Catalysts & Scenarios: What Could Change the Narrative

The narrative for Rigetti hinges on a narrow window of technical and commercial validation. The primary near-term catalyst is the delivery of two quantum computing systems totaling $5.7 million in purchase orders, with delivery expected in the first half of 2026. This is a critical test. Success here would signal that enterprise demand for early-stage quantum hardware is real and that Rigetti's commercial model is functional. Failure to meet these delivery timelines, however, would be a severe red flag. It would suggest the company is struggling with execution or that the initial wave of interest is evaporating, potentially accelerating the valuation collapse for a stock already trading at a 1,025 times sales multiple.

A broader market shift could compound this risk. The quantum sector is a high-multiple growth story, and such names are disproportionately vulnerable to a rotation out of tech and growth stocks. If AI spending growth slows and investors seek value, the extreme valuations of quantum pioneers like Rigetti would be the first to face severe de-rating. The stock's recent volatility, having plunged 70% at the start of the year before recovering, underscores this inherent fragility.

The ultimate scenario for a "plunge" requires a combination of technical and financial failures. The company's roadmap is ambitious, with a 1,000+ qubit system not expected until around the end of 2027. Any significant delay in hitting these milestones would erode confidence in the long-term commercial timeline. This would be paired with a funding shortfall. Rigetti's cash position, while healthy at $600 million after warrant exercises, is a finite resource for a company burning tens of millions in operating losses. A failure to secure additional capital at a reasonable valuation would force dilution, further punishing existing shareholders and signaling a complete loss of market confidence in the quantum timeline.

The bottom line is a binary bet on a decade-long journey. The $5.7 million orders are a small but necessary step. The real validation will come years down the line, if ever, with a fault-tolerant system. For now, every quarterly update and technical announcement is a referendum on a thesis that depends entirely on the market's patience for a technology that is still, as experts note, at least a decade away from mainstream utility.