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The RGTI Report

This week's small-cap buzz focuses on Rigetti Computing, Inc. (RGTI), a quantum computing company listed on the Nasdaq and part of the Russell 2000 index. Following a significant turnaround in sentiment and price action, RGTI has captured the attention of high-risk, high-reward investors.

Fundamental Analysis

Rigetti Computing operates in the highly specialized and capital-intensive quantum computing sector.

• Business Model: The company designs and manufactures quantum processing units (QPUs) and offers access to its quantum computers via the cloud through its Quantum Cloud Services platform. It has a hybrid computing approach, integrating quantum and classical computing.

• Financial Health: As a developing technology company, Rigetti is currently not profitable and is focused on research, development, and scaling its technology. It typically has a high burn rate relative to revenue, which is characteristic of the deep-tech sector. The company's valuation, despite being small-cap, is driven more by its future technological potential and market size (Total Addressable Market) than current revenues or earnings. Key fundamentals to watch are its cash runway, dilution from capital raises, and gross margin on its systems and services.

• Growth Prospects: Growth is tied to advancements in quantum technology, successful deployment of more powerful QPUs (like its recent 84-qubit system), and securing government/commercial contracts for quantum solutions.

Technical Analysis

The stock has shown signs of a significant bottoming process and a recent powerful upward trend, likely fueled by short squeezes and positive sentiment surrounding AI-related tech stocks.

• Recent Trend: RGTI experienced an explosive rally that moved it well above key long-term moving averages. This indicates a strong shift in market momentum from bearish to bullish.

• Volume: The recent price surge has been accompanied by a massive increase in trading volume, which lends credibility to the move and suggests strong institutional and retail interest.

• Volatility: Given the low float and intense speculative interest, the stock exhibits extremely high volatility. Swing traders are actively engaged, and pullbacks can be sharp, though the overall recent trajectory has been aggressively positive. Support has recently formed at the prior resistance levels it broke through, and traders are watching to see if this new, higher baseline holds.

  

Big News

• Launch of the 84-Qubit Aspen-M System: Rigetti announced the successful deployment and availability of its new, more powerful 84-qubit quantum computer, marking a significant milestone in its hardware roadmap. This upgrade is seen as a crucial step toward achieving quantum advantage.

• Major Government Contract Award: The company secured a multi-million dollar contract from a defense or research agency for the development and testing of next-generation quantum algorithms and hardware, validating its technology for critical national interests.

• Strategic Partnership with a Cloud Provider: Rigetti unveiled a new partnership with a major global cloud computing giant to integrate its quantum services more broadly into the partner's platform, significantly expanding its reach to enterprise customers.

• Successful Capital Raise: The company announced a private placement or secondary offering to strengthen its balance sheet, providing essential capital to extend its cash runway and fund continued QPU development, though this also resulted in some near-term shareholder dilution.

Expert Recommendations and Forecast

Expert sentiment has become cautiously optimistic following the recent technological advancements and market interest.

• Expert Recommendations: The consensus from the few analysts covering the stock is typically a "Buy" or "Speculative Buy" rating, acknowledging the high risk but emphasizing the massive potential upside should the company execute its roadmap. The high-risk nature of quantum computing prevents "Strong Buy" ratings from being universally applied.

• Expert Price Targets: Price targets have a wide range, reflecting the inherent uncertainty of the sector. Short-term targets have been raised recently from the mid-single digits to a $7.00 to $12.00 range based on momentum and technological milestones. Long-term, high-end targets may stretch into the teens, predicated on achieving a key technological breakthrough.

Earnings and Outlook

• Next Earnings Date: Rigetti Computing's next quarterly earnings report is typically expected in early to mid-November (specific date to be confirmed), covering its third-quarter performance.

• Outlook: The outlook remains focused on progress metrics rather than profitability. Investors will be looking for updates on the following:

  • Technological Milestones: Progress on its next-generation QPU systems (e.g., the 336-qubit machine).

  • Customer Pipeline: Growth in commercial and government customer engagements.

  • Revenue Growth: A sequential increase in revenue from cloud services and contracts.

  • Cash Position: The company's cash on hand and projected operating expenses, which dictates its runway. The overall outlook for the deep-tech sector is positive, with an emphasis on quantum hardware breakthroughs as the primary value driver.

STOCK PICK OF THE WEEK!

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