Two stocks in the quantum computing space have seen huge returns in the past year – Rigetti Computing (RGTI) with a 2,570% gain and D-Wave Quantum (QBTS) with an 2,840% gain. However, analysts at Cantor Fitzgerald and Needham predict that Rigetti’s stock could decline by 54% and D-Wave’s by 41%. These stocks are considered overvalued due to their high price-to-sales ratios, which can lead to a significant decline if conditions change.
Rigetti Computing specializes in gate-based quantum computing systems, which may not have practical use cases for most enterprises for at least five years. The company trades at 1,253 times sales, making it expensive compared to other companies. D-Wave Quantum, on the other hand, has historically focused on annealing systems, which excel at solving optimization problems in industries like finance and logistics.
Analysts are warning investors about these potential downsides due to high cash burn rates and low profitability. Rigetti reported a 42% decrease in sales in its second-quarter earnings report, while D-Wave’s revenue increased by 42%. The stocks’ prices may be affected by the changing market conditions and increasing competition in the quantum computing space.
Investors should consider these factors before investing $1,000 in Rigetti Computing or any other stock. The Motley Fool Stock Advisor team has identified 10 best stocks that could produce monster returns in the coming years, but not Rigetti Computing.
Source: https://www.nasdaq.com/articles/2-popular-quantum-computing-stocks-sell-they-fall-41-and-54-according-select-wall-street