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Why Rigetti Computing Popped Today

The Motley Fool · 1d ago

Key Points

  • As part of the CHIPS Act, Rigetti will receive a $100 million investment from the Dept. of Commerce.

  • The size of the government's stake was not disclosed.

  • Rigetti is still only generating minimal revenue.

Shares of Rigetti Computing (NASDAQ: RGTI) were moving higher today after the quantum computing company secured $100 million in CHIPS Act funding, along with quantum peer D-Wave Quantum, showing the sector becoming the latest to receive interest from the federal government, which had previously taken stakes in chip stocks like Intel and GlobalFoundries.

As of 9:54 a.m. ET, Rigetti Computing stock was up 7.9% after gaining as much as 12.2% earlier in the morning.

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A round computer chip inside rotating electrons.

Image source: Getty Images.

Rigetti gets CHIPS Act funding

In a press release this morning, Rigetti said that it had signed an agreement with the Department of Commerce for a $100 million award to accelerate R&D to scale and advance superconducting quantum computers.

The value of the government's stake is unclear, as the release just said that the Dept. of Commerce will receive a minority, non-controlling equity stake in the company. Rigetti currently has a market cap of around $5 billion, so taking the investment at face value would equal a stake of about 2% for the government.

What's next for Rigetti

Rigetti is still barely generating revenue, reporting $5.1 million in revenue in the second quarter, and quantum computing remains an emerging technology.

Still, the interest from the government is clearly a positive for Rigetti and its peers. While that funding won't make it a viable business, it should help it advance its research and bring it closer to generating meaningful revenue. Still, the stock is speculative until it can get to that point.

Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Globalfoundries and Intel. The Motley Fool has a disclosure policy.