Billionaires Are Flocking to a Quantum Computing Stock That Has Surged More Than 3,700% in the Last Year

Quantum computing has emerged as one of the most talked-about sectors in the market over the last year, with certain stocks delivering astonishing gains. However, there remains considerable debate among investors regarding the real-world potential of quantum computing and whether it can be widely commercialized. One standout in this field is Rigetti Computing ( RGTI 18.29%), whose shares have soared more than 3,700% in just twelve months.

Major Wall Street investors appear to be paying attention. During the second quarter, several leading hedge funds significantly increased their stakes in Rigetti, which could be seen as a positive indicator.

Quantum is gaining momentum

Quantum computers could represent the next major leap in computing, utilizing quantum qubits. Unlike traditional digital systems that use binary values, qubits can exist in multiple states, making them ideal for tackling certain complex pattern recognition problems. While this may seem like a narrow application, these capabilities are vital in areas such as medical research, financial analysis, and encryption.

Some scientists are convinced that once quantum computers reach their full potential, they will outperform today’s most advanced supercomputers for certain specialized tasks, potentially addressing some of society’s toughest challenges, including those in the financial sector.

Rigetti has positioned itself as a pioneer in quantum computer development. In July, the company revealed that its 36-qubit machine achieved a median 2-qubit gate fidelity of 99.5%. Since definitions of gate fidelity can vary across companies, direct comparisons are challenging. Nevertheless, this 99.5% figure means Rigetti’s system has half the noise of its 2024 flagship, the Ankaa-2.

Moreover, increasing the number of qubits in a quantum system theoretically boosts its computational power. Rigetti’s management has also stated they are on schedule to launch a 100-qubit system with comparable accuracy by the end of 2025.

Another positive sign for industry observers is the growing government interest in quantum technology commercialization. Recently, Rigetti secured a $5.8 million contract from the Air Force Research Laboratory to assist in developing a superconducting quantum network, which would enable rapid and precise data exchange within a quantum computing framework.

B. Riley Financial analyst Craig Ellis recently reaffirmed his buy recommendation for Rigetti and raised his price target to a Wall Street-leading $35 per share. Ellis specifically pointed to the evolving perspective at the Department of Energy’s National Laboratories, which now seem to prioritize quantum technologies with clear commercial applications.

“What was once considered frontier technology is quickly progressing toward practical integration and commercial use,” he commented.

This shift has not gone unnoticed by billionaire investors and their hedge funds, as demonstrated by several notable moves in the second quarter:

• Citadel Advisers, which manages Citadel’s hedge fund portfolio, boosted its holdings by over 50% in the second quarter and now owns upwards of 1.2 million shares.
• Tudor Investment, led by Paul Tudor Jones, opened a new position and acquired more than 900,000 shares during the quarter.
• Two Sigma Investments, established by billionaires John Overdeck and David Siegel—who now co-chair the board—increased its stake by 183%, bringing its total to over 600,000 shares.

Exercise caution with institutional moves

Although tracking institutional investors can help uncover new opportunities and validate investment ideas, it’s important not to follow these moves without careful consideration. These trades are often disclosed well after they occur, as they are revealed in regulatory filings months later.

Furthermore, retail investors rarely understand the true reasoning behind a hedge fund’s investment. Hedge funds frequently engage in short-term trading, which may not align with the best interests of individual investors. Additionally, while billionaires may be at the helm of these funds, it’s unclear how directly involved they are in day-to-day investment decisions. They likely influence hiring and strategy, but may not be making every trade themselves.

Rigetti’s technology holds significant promise. However, the company currently has a market capitalization of $9.6 billion, generates minimal revenue, and is only just reaching breakeven. Achieving widespread commercial success could still be years away, and quantum computing remains a costly and complex field. Each step forward will present substantial challenges.

If Rigetti manages to bring quantum computers to market and they live up to expert expectations, the stock could see substantial gains. However, any setbacks could trigger steep declines. For these reasons, I would either steer clear of the stock or only allocate a small, speculative portion of my portfolio.