Rigetti Computing (NASDAQ: RGTI) has experienced a significant stock rally, propelled by broader market optimism surrounding artificial intelligence. However, analysts suggest this ascent is largely driven by speculative "FOMO" rather than substantial improvements in its core business or commercial sales, which remain a distant prospect for the quantum computing firm.

U.S. equities markets have seen a notable uptick in sentiment for companies perceived to be beneficiaries of the artificial intelligence (AI) spending boom. Amidst this backdrop, Rigetti Computing (NASDAQ: RGTI) shares have undergone a substantial rally, with the stock advancing 64% and outperforming the wider market's 9.6% increase from its April 2025 bottom, including an outsized 154.5% rally over that period. This movement reflects what analysts describe as "exuberant market sentiments surrounding the durability of AI-related spending trends" and a "FOMO Rally."

The Event in Detail: Disconnect Between Price and Performance

Despite the significant increase in its share price, Rigetti Computing faces considerable financial hurdles. The company reported a revenue performance of $3.27 million in the first half of 2025, marking a 46.6% year-over-year decrease. Quarterly figures further illustrate this trend, with Q1 2025 revenue at $1.5 million, a 50% drop from Q1 2024, and Q2 2025 revenue at $1.8 million, down approximately 41% year-over-year, missing analyst expectations. Operating losses have deepened to -$41.51 million in H1 2025, a 27% year-over-year increase, and totaled -$77 million over the last twelve months. The company also registered a net loss of $0.05 per share for Q2 2025. Share-based compensation (SBC) expenses rose to an annualized $15.44 million in H1 2025, up 23.1% year-over-year, contributing to ongoing shareholder equity erosion.

Analysis of Market Reaction: A Speculative Ascent

The rally in Rigetti Computing stock appears to be largely decoupled from its fundamental financial performance. Analysts attribute the stock's ascent to speculative investor sentiment, particularly a "FOMO Rally" (fear of missing out) as market participants seek exposure to the burgeoning AI sector. While Rigetti operates in quantum computing, a field often conflated with broader AI trends, its current valuation metrics suggest an unsustainable premium driven by hype rather than tangible commercial traction. The company's Forward Enterprise Value-to-Sales (FWD EV/Sales) ratio stands at an elevated 612.71x as of September 2025, a significant increase from its 1-year mean of 213.40x and 3-year mean of 74.85x. This stretched valuation indicates a substantial overestimation of future revenue growth relative to historical trends.

Broader Context and Implications: Commercialization Challenges and Peer Comparison

Rigetti Computing remains a relatively small player in the nascent quantum computing market, accounting for only 6% of total systems sold by deal amount between 2020 and June 2025. The company's business strategy focuses on a narrow client base, primarily "government labs and academic institutes," for one-off research purposes rather than scalable data center applications. This approach limits monetization opportunities, leading to a "lumpy sales cadence" and a "deepening cash burn." Despite achieving a technical milestone with its Cepheus-1-36Q system reaching 99.5% two-qubit gate fidelity in Q2 2025, the challenge lies in translating these technological advancements into commercial success.

Comparatively, peers like IONQ are aggressively expanding their intellectual property and market presence, with hints of launching a 256-qubit system in 2026. Another competitor, D-Wave Quantum Inc. (NYSE: QBTS), shows more immediate commercial traction with scaling revenue and a growing customer base, indicating a clearer path to monetization. Rigetti's estimated FY2027 EV/Sales valuation of 152.92x, based on a current Enterprise Value of $5.77 billion and downgraded consensus FY2027 revenue estimates of $37.73 million, underscores its speculative return prospects as a company in the start-up, pre-revenue stage. The company has also engaged in dilutive capital raises, securing $350 million in equity offerings in 2025, which led to a 30% shareholder dilution in 2024, alongside an increase in short interest volumes.

Looking Ahead: The Need for Tangible Progress

For investors, the current valuation of Rigetti Computing appears to reflect speculative optimism rather than a robust commercial outlook. While the company possesses cash reserves of $237.7 million as of July 2025, providing a runway for continued investment in research and development, the path to sustainable revenue generation and profitability remains challenging. The market will be closely watching for signs of broader commercial adoption beyond one-off research contracts, and whether Rigetti can establish a stronger foothold in market share and monetization opportunities within the rapidly evolving quantum computing ecosystem. Until significant progress is made in these areas, the stock's trajectory may continue to be influenced more by broader market sentiment and less by its underlying business fundamentals.