Executive Summary / Key Takeaways

• Rigetti has established clear technological leadership in superconducting quantum computing, achieving 99.5% median two-qubit gate fidelity on its 36-qubit Cepheus-1-36Q system and demonstrating a scalable chiplet architecture that halves error rates from prior generations.
• The company secured a transformative partnership with Quanta Computer, committing over $100 million each over five years, while strengthening its balance sheet to approximately $600 million in cash with no debt following strategic equity raises.
• Near-term revenue faces headwinds from the expired National Quantum Initiative Act, with Q3 2025 revenue declining 18% year-over-year to $1.95 million and gross margins compressing to 21% due to unfavorable contract mix.
• Management has articulated a precise roadmap to quantum advantage: 100+ qubits by end-2025, 150+ qubits by end-2026, and 1,000+ qubits by end-2027, targeting the critical 99.9% fidelity threshold required for practical applications.
• Rigetti's open, modular architecture and superconducting qubit speed advantage position it favorably against larger competitors, though the company must execute flawlessly while burning approximately $50 million annually in operating cash flow.

The Quantum Computing Landscape and Rigetti's Strategic Position

The quantum computing industry stands at an inflection point. After years of theoretical promise, the race toward "quantum advantage"—the threshold where quantum computers solve practical problems beyond classical reach—has intensified. Rigetti Computing has positioned itself as a technological leader through vertical integration, operating its own wafer fabrication facility (Fab-1) and pioneering a chiplet-based architecture that mirrors semiconductor industry scaling principles.

Unlike trapped-ion competitors constrained by gate speeds measured in hundreds of microseconds, Rigetti's superconducting qubits operate at nanosecond timescales, delivering speeds commensurate with modern CPUs and GPUs. This fundamental speed advantage enables seamless hybrid integration with high-performance computing systems, a strategic differentiator that management emphasizes repeatedly. The company's technology stack supports NVIDIA (NVDA)'s NVQLink platform, creating a pathway for quantum processors to augment AI supercomputers and generative AI applications.

Rigetti's business model spans three pillars: collaborative research contracts, quantum processing unit (QPU) sales, and Quantum Computing as a Service (QCaaS). This diversified approach serves government agencies, academic institutions, and commercial enterprises, though government funding concentration remains a critical vulnerability.

Technological Differentiation: The Chiplet Advantage

Rigetti's core innovation lies in its modular chiplet architecture. In July 2025, the company demonstrated Cepheus-1-36Q, the industry's largest multi-chip quantum computer comprising four 9-qubit chiplets. This system achieved 99.5% median two-qubit gate fidelity, representing a 2x reduction in error rates from the preceding Ankaa-3 system.

The chiplet approach addresses quantum computing's fundamental scaling challenge. Rather than manufacturing monolithic processors with diminishing yields, Rigetti tiles smaller, high-quality chiplets—a methodology proven in classical semiconductors over decades. This enables rapid iteration and performance improvements. The Ankaa-3 system, launched in December 2024, already achieved 99.0% median iSWAP gate fidelity and 99.5% fSim fidelity across 84 qubits.

Management's roadmap leverages this architecture aggressively. The 100+ qubit system planned for end-2025 will use 9-qubit chiplets. The 150+ qubit 2026 system will employ the same building blocks. For the 1,000+ qubit 2027 target, Rigetti will scale to 36-qubit chiplets. This methodical progression de-risks the path to quantum advantage while maintaining performance standards.

Strategic Partnerships Accelerating the Path Forward

In February 2025, Rigetti announced a landmark collaboration with Quanta Computer, a global server manufacturing leader. Both companies committed over $100 million each across five years. Quanta invested $35 million directly in Rigetti equity, closing in April 2025. This partnership optimizes the technology stack: Quanta develops non-QPU components—control systems, dilution refrigerators, and packaging—while Rigetti focuses exclusively on quantum chip fabrication and architecture.

This division of labor accelerates development cycles and leverages Quanta's manufacturing expertise. For Rigetti, it means accessing world-class supply chain and production capabilities without building them internally. For Quanta, it provides entry into quantum computing's ground floor. The collaboration targets data center integration, positioning quantum processors alongside CPUs and GPUs in enterprise environments.

Government partnerships validate Rigetti's technical approach. The company participates in DARPA's Quantum Benchmarking Initiative Stage A, received a $5.48 million AFOSR award for Alternating-Bias Assisted Annealing technology, and secured multiple Innovate UK awards. A three-year, $5.8 million Air Force Research Laboratory contract advances superconducting quantum networking with QphoX. These programs provide non-dilutive funding while driving R&D milestones.

Financial Performance: R&D Investment Phase

Rigetti's Q3 2025 results reflect its R&D-first strategy. Revenue declined 18% year-over-year to $1.95 million, with nine-month revenue down 31% to $5.36 million. The contraction stems primarily from the expired National Quantum Initiative Act, which funded academic and DOE lab contracts. Government customers represented 92.6% of Q3 revenue.

Segment performance reveals the shift. Collaborative Research and Professional Services revenue fell 3.4% in Q3 to $1.896 million, but dropped 28.3% over nine months as contracts completed. Materials and QPU Sales generated zero revenue in Q3 versus $343,000 prior year, though $5.7 million in Novera system purchase orders announced in September will recognize in Q1 and Q2 2026. QCaaS revenue declined 29.2% to $51,000 as the company prioritizes system development over cloud access monetization.

Gross margins compressed dramatically to 21% in Q3 2025 from 51% year-ago, driven by unfavorable contract mix. U.K. National Quantum Computing Centre agreements carry lower margins but advance critical R&D. Management explicitly accepts this trade-off, stating these contracts "advance our R&D necessarily more than the margin profile."

Operating expenses increased as Rigetti accelerated investment. R&D spending rose $2.3 million in Q3 and $7.9 million over nine months, reflecting higher headcount, stock compensation, and materials costs. SG&A increased $0.1 million and $0.9 million respectively. The company burned $43.6 million in operating cash flow through nine months, up $1.5 million year-over-year.

Liquidity and Capital Resources

Rigetti's balance sheet remains robust. As of September 30, 2025, the company held $558.9 million in cash and investments with zero debt. Subsequent warrant exercises through November 6 brought total liquidity to approximately $600 million. This war chest funds operations for at least 12 months at current burn rates.

The capital raise strategy proved opportunistic. Rigetti completed a $350 million at-the-market equity offering in June 2025, avoiding dilutive convertible debt. The Quanta partnership commits at least $250 million in quantum computing investment over five years, though this represents operational spending rather than external capital.

Future capital requirements include potential fab upgrades. Management notes that scaling beyond 1,000 qubits at 99.9% fidelity may require a 200mm or 300mm facility, costing "hundreds of millions" versus billions for CMOS fabs. Planning could begin within a year, representing the next major capital inflection point.

Competitive Positioning: David Among Goliaths

Rigetti competes directly with IBM , Google , Microsoft , and IonQ . Each rival brings distinct advantages, but Rigetti's architecture creates defensible moats.

IBM leverages decades of research and enterprise relationships. Its quantum systems reach similar qubit counts, but Rigetti's chiplet approach offers superior scaling potential. IBM's foundry model remains unproven for quantum; Rigetti's vertical integration through Fab-1 enables faster iteration. Financially, IBM's diversified business generates strong cash flow, while Rigetti's pure-play focus concentrates risk but maximizes quantum upside.

Google achieved quantum supremacy in 2019 but maintains a closed, mainframe-like architecture. Rigetti's open modular system attracts national labs seeking third-party innovation integration. Google's perimeter wiring approach may limit scaling; Rigetti's 3D chiplet integration already demonstrates four-chip systems. While Google's resources dwarf Rigetti's, the startup's agility and openness create partnership opportunities the tech giant cannot match.

Microsoft pursues a software-first strategy with Azure Quantum, partnering with multiple hardware providers. Rigetti's NVQLink support and hybrid computing focus align with this ecosystem approach. However, Microsoft's captive audience and cloud integration pose distribution challenges for Rigetti. The partnership with Quanta helps level this playing field by enabling complete system delivery.

IonQ (IONQ) represents the trapped-ion alternative. Rigetti's superconducting qubits operate 1,000x faster, a decisive advantage for hybrid HPC applications. IonQ's systems excel in coherence but cannot match Rigetti's gate speeds. Both companies face similar commercialization timelines, but Rigetti's chiplet architecture may scale more efficiently than IonQ's ion-trap arrays.

Management's M&A stance reflects confidence: "As of today, we don't see anything out there that can help us. We are in the leadership camp right now when it comes to overall quantum computing performance." This suggests organic growth remains superior to acquisition-driven expansion.

The Roadmap to Quantum Advantage

Rigetti defines quantum advantage as 1,000+ qubits, 99.9% median two-qubit gate fidelity, gate speeds under 50 nanoseconds, and real-time error correction. Management projects this milestone between 2027 and 2029—four years away at minimum.

The near-term roadmap is concrete:

• End of 2025: 100+ qubit chiplet-based system at 99.5% fidelity
• End of 2026: 150+ qubit system at 99.7% fidelity
• End of 2027: 1,000+ qubit system at 99.8% fidelity

Each iteration targets fidelity improvements while scaling qubit count. The final step from 99.8% to 99.9% fidelity plus error correction spans 2027-2029. This timeline aligns with DARPA's QBI program, which Rigetti continues pursuing despite not advancing to Stage B initially.

Technical assumptions include successful flex cable and optical signaling integration to manage thermal load and physical density. Optical signaling offers "tremendous advantage not only from a physical space standpoint but also from the thermal load which converts into the cool down times."

Key Risks and Challenges

Rigetti faces multiple execution risks. The expired National Quantum Initiative Act created funding uncertainty, though recent reauthorization restored $625 million over five years. This represents a first step; management expects "much better funding" in coming months. Until then, academic and DOE lab customers remain constrained.

Technical execution risk looms large. Achieving 99.9% fidelity at thousand-qubit scale requires invention beyond current roadmaps. While management expresses confidence, they acknowledge "our goals and objectives are aspirational and are not guarantees." The chiplet approach must prove its long-range coupling capabilities, an industry-wide challenge.

Competitive pressure intensifies as IBM (IBM) and Google (GOOGL) accelerate their own roadmaps. Amazon (AMZN) and Microsoft (MSFT) could leverage cloud dominance to marginalize independent hardware vendors. Customer concentration—92.6% government revenue—creates policy vulnerability.

Capital intensity presents financial risk. The $250 million Quanta commitment plus potential fab expansion requires sustained cash burn. While current liquidity appears sufficient, any roadmap delays could necessitate dilutive equity raises.

Conclusion

Rigetti Computing occupies a unique position in quantum computing's critical development phase. The company has demonstrated technological leadership with industry-first chiplet systems achieving 99.5% fidelity, secured strategic partnerships that accelerate its roadmap, and built a robust balance sheet to fund the journey to quantum advantage.

Near-term financial performance reflects deliberate R&D prioritization over commercial revenue. The expired NQI Act creates temporary headwinds, but the recent reauthorization and strong government engagement signal renewed support. The Quanta partnership de-risks manufacturing while the $600 million cash position provides multi-year runway.

The investment thesis hinges on execution of the 2025-2027 roadmap and the subsequent leap to 99.9% fidelity with error correction. If Rigetti delivers, its open, modular architecture could become the industry standard for hybrid quantum-classical data centers. The speed advantage over trapped-ion competitors and architectural openness versus tech giants create defensible moats.

For investors willing to accept the risks inherent in pre-commercial quantum computing, Rigetti offers pure-play exposure to a potential generational technology shift. The company's leadership in chiplet scaling, validated by DARPA and national lab partnerships, suggests the technology is not speculative science but engineering execution. Success means capturing a share of a market management estimates at $100 billion within 15 years. Failure means dilutive capital raises or competitive obsolescence. The next 24 months will prove whether Rigetti's chiplet gambit bridges the gap between today's R&D contracts and tomorrow's quantum advantage.