A Rigetti Game Plan to 'Broaden' Quantum Computing Exposure

I've noticed that I have started to talk and write about quantum computing in the way I once spoke of generative artificial intelligence as if the AI takeover of the economy is still not largely in the future. This is the way I used to write about the cloud/data center. Before that — way before that — we used to talk about the internet as if it were something distant.

Psst, I still run to Walmart  (WMT)  when I need something today. I'll go the Amazon  (AMZN)  route when I know I'll get a better price, but otherwise, I'd rather hop in the car and take a 15-minute break when I realize that I am out of office supplies or Cheerios.

Now, if you follow me, you know that I remain long D-Wave Quantum  (QBTS)  and Quantum Computing Inc.  (QUBT) . The one is up almost 2,800% over the past month, the other up an even more impressive 3,240% over that same time. Yes, those numbers look gaudy, but these stocks had sold off. They are up a much more modest (but still great) 73% and 47% over 12 months.

I have mentioned in other articles that I would like to broaden my exposure to the quantum computing space. Now, broadening and increasing that overall exposure are two different things. 

I don't need to become over-exposed, so I only want to increase that exposure a bit, but I also want to broaden my reach to eventually include IonQ  (IONQ)  and Rigetti Computing  (RGTI) , not to mention IBM  (IBM)  as of all legacy tech, IBM is competing with the little guys in this embryonic technology of tomorrow. Make that next month. Generative AI is still the technology of tomorrow.

Currently...

I am eyeballing Rigetti. IonQ has a really cool name. D-Wave is pretty cool too. That said, Rigetti makes me think of baseball and no-hitters. Hey, we all have something that makes us peculiar. 

In August, Rigetti posted a Q2 GAAP loss of $0.13 per share on revenue of just $1.8 million. That's not a misprint. There are no zeroes missing. That's not supposed to be a "B." That is par for the course. IonQ generated sales of just $20 million for their most recent quarter, which absolutely crushes the other three names I've mentioned here.

However, during that earnings call, Rigetti CEO Subodh K. Kulkarni highlighted the demonstration of "the industry's largest multi-chip quantum computer with impressive performance." Kulkarni announced that "Cepheus-1-36Q," which is the industry's largest multichip quantum computer, had been released for general availability. Cepheus-1-36Q has been deployed to the Rigetti Quantum Cloud Services platform and will be made available on Microsoft  (MSFT)  Azure thereafter."

Rigetti also announced a sharp reduction in their error rate, which is a thing in quantum computing if this article is your initiation to the topic. During the call, Kulkarni stated, "Just 6 months after our record performance with Ankaa-3, we have once again halved our error rates. With a median 2-qubit gate fidelity 99.5%. Cepheus-1-36Q has achieved a 2x reduction in 2 qubit gate error rate from our previous Ankaa-3 system." Put simply, these computers are still able to tackle far more complex material than could classic computers, and now they're screwing up a lot less.

Looking Ahead

Financial guidance? Uhm, no. Management mentioned that the timeline to quantum advantage as "about 3 to 4 years away from getting to the 1,000-plus qubit, 99.9% fidelity with error correction and gate speeds of less than 50 nanoseconds."

For those who may be lost, quantum advantage refers to the ability of quantum computers to solve complex, real-world problems that classical computers could not efficiently handle even if granted the advantage of extended time.

This is one step ahead of "quantum supremacy" which is where classical computers become essentially useless for solving problems too complex, too costly or too much of a drain on existing suppliers of power to be an optimal choice. Oh, and a nanosecond is equal to one billionth of a second as opposed to microseconds (one millionth) and milliseconds (one thousandth).

How to Initiate​

What we have here is Rigetti's second attempt to break out and run in about 10 months. ​This time, however, there is a well-established upward-sloping trend in place illustrated by this Raff Regression model. 

Relative Strength is well beyond what one would call technically overbought. The daily MACD (moving average convergence divergence) is just as extended and showing no signs of cooling off, though I think I know that this period of cooling is going to happen at some point.

My plan initially will be to enter in small size as the share price and 21-day EMA (exponential moving average) work towards meeting. Right now, they are about $9 apart, but that can change in a heartbeat. This is where the swing crowd will be tested. 

My intent is to enter with 1/8 of my intended allocation and to add in increments of 1/8 until I am where I want to be. No, I am not going to buy this stock close to the top of the chart. If that means I miss it completely, then I still have the other two names in inventory. It won't be like I was shut out. ​

IonQ is showing the same kind of topping behavior, but with still strong but weaker indicators. Take a look at this:​

​IBM has the best chart of all of them. I won't be afraid to initiate that name either. I will, though, wait to see if that Cup pattern adds a handle. That would be my opportunity to buy, while also creating a bullish pivot. Food for thought.

At the time of publication, Guilfoyle was long QBTS, QUBT and MSFT equity.