While quantum computing doesn't yet have widespread practical applications, the technologies involved with it are improving. Artificial intelligence (AI) is widely believed to help accelerate quantum computing's applications, providing even more fuel to this tech fire.
The result is that many pure-play quantum computing stocks , including Rigetti Computing ( RGTI +0.13% ) , have seen their share prices surge over the past three years, with Rigetti's rising 718%.
So, where will the company be in three more years, and can it replicate its past share price success? While I think Rigetti will likely expand its quantum computing sales and gain more customers, recreating its past returns will be very difficult. Here's why.
Where Rigetti could be in three years
While Rigetti's revenue is increasing and it's gaining some commercial customers, the company still needs to achieve more technological advancements before it sees meaningful sales. CEO Subodh Kulkarni said recently that "commercial revenue remains early" and that, "We remain focused on a clear sequence designed to position Rigetti to reach quantum advantage in roughly three years."
That's an important timeline for Rigetti because commercial sales will likely remain limited before then, and it helps put the company's current revenue into perspective. Sales rose by 185% in the second quarter, but that impressive jump still resulted in just over $5.1 million in revenue.
That's hardly an impressive figure, and it shows why Rigetti's management has tried to temper expectations.
But Rigetti is making progress with its quantum computing technologies, and in three years, it will likely have more customers and contracts than it does now. For example, the company said it expanded its collaboration with Hewlett Packard and the Pittsburgh Supercomputing Center to develop a hybrid quantum-classical supercomputer.
Rigetti also recently signed a letter of intent with the U.S. Department of Commerce for up to $100 million in funding over the next three years.
What's more, Rigetti has no debt and $541 million in cash and cash equivalents to keep investing in advancing its quantum computing technology.
Based on its current deals, rising sales, and the company's own estimates that more commercial sales are likely over the next three years, Rigetti appears to be on the right path.
Rigetti stock likely can't replicate past three-year success
While Rigetti's shares have soared more than 700% over the past three years, it's highly doubtful it can sustain that momentum.
Not only is it extremely rare for stocks to continue rising at such an explosive rate, but much of the investing momentum that helped drive Rigetti's shares higher has shifted to AI stocks .
Investors have realized that they can achieve very impressive returns on artificial intelligence stocks while enjoying the stability of owning a profitable company. Rigetti and its peers can't compete with that, and many investors have shifted from riskier quantum computing stocks to AI.
And with the AI boom still well underway -- and global AI infrastructure spending estimated to surpass $1 trillion next year -- it's likely that AI companies will continue to attract more investor attention as they reap the financial rewards.