As you read this, I should be landing in Australia and it’s tomorrow. If I’m asked to testify where I was September 16, I can honestly say I wasn’t on September 16. I’m visiting one client and then taking a vacation!

For the rest of you however, this last full week before the holidays kick off won’t be quiet. Nvidia (NVDA:NASDAQ) earnings will likely frame the news of the week, and Elastic (ESTC:NASDAQ) will be just as interesting.

The full archive and research database live here: https://epistrophy.beehiiv.com (your email address is the password). Check it out.

As always, I’m focused on three things:
1) Technology-driven change;
2) the latest in innovation and startup trends, and;
3) stock fraud.

Companies Discussed

In This Note:

1. Companies Discussed

2. Quantum Leap of Faith

3. Tweet O’ The Week

4. Epistrophy In The News

5. 📆 of Epistrophy Events

6. Availability This Week

Quantum Leap of Faith

Rigetti Q3: Still A Lab Experiment, Not A Business.

Rigetti Computing (RGTI: NASDAQ) has been selling a story more than a product. The story is elegant: that quantum mechanics can be engineered into a new class of computers able to solve the world’s hardest problems in seconds. The product is still mostly theoretical. After a decade and hundreds of millions in losses, the company now promises a 1,000-qubit machine by 2027 with near-perfect fidelity. That number—99.8%—is either an engineering goal or an act of faith.

The company’s latest quarter, reported November 10, offered both spectacle and sobriety. Revenue fell to $1.9 million, less than what some AI startups spend on cloud credits in a week. Operating losses reached $20.5 million, widening from last year’s $17.3 million. Rigetti closed the quarter with $558.9 million in cash, most of it from warrant exercises, meaning the market is still willing to fund the dream. Yet the numbers suggest a scientific expedition sustained by investors rather than customers.

Chief executive Subodh Kulkarni said the company “saw strong momentum” in demand for its on-premise quantum systems and “development of collaborations to advance the ecosystem.” The evidence of that momentum is thin. Rigetti announced two small system sales worth $5.7 million—to a manufacturing firm in Asia and an applied-physics startup in California—and a $5.8 million research contract with the Air Force Research Laboratory. That’s not a business model; it’s an R&D subsidy.

The company remains vertically integrated by design. It builds its own superconducting chips at “Fab-1,” a facility in Berkeley that manufactures devices cooled near absolute zero. It also runs a cloud platform, Rigetti Quantum Cloud Services, which lets customers access its processors remotely. This full-stack model, once a bragging right, now resembles a cost sink. Owning the means of production offers control but no economy of scale; operating a cloud service for machines few know how to use compounds the overhead.

Technically, Rigetti’s platform rests on multi-chip modularity—linking smaller superconducting processors into larger systems. Its latest hardware, the Ankaa-3, contains 84 qubits and improved two-qubit gate fidelity, reducing error rates to roughly 1%. In quantum computing, that’s progress. The company expects to cross 100 qubits next year and reach 150 by 2026. But the real challenge is not count; it’s coherence. Qubits decohere in microseconds, and every additional connection increases noise. The engineering demands are punishing: dilution refrigerators operating near 10 millikelvin, control wiring that introduces heat and electromagnetic interference, and calibration sequences that require classical supercomputers to stabilize. Rigetti’s claim of “99.5% two-qubit fidelity” is less a milestone than a starting line in a marathon of diminishing returns.

To achieve its 2026–2027 roadmap, Rigetti will need not just better materials and design but near-perfect control electronics and packaging. The company’s collaboration with Quanta Computer (2382: TPE) in Taiwan is meant to address that. The agreement calls for each party to invest $250 million over five years, with Quanta providing manufacturing capability for control systems and other non-quantum components. Rigetti also plans to issue Quanta roughly $35 million in stock. The deal gives Rigetti industrial credibility it has long lacked, though it also underscores the company’s dependence on partners with deeper pockets.

The company has tried to cast a wide net of institutional allies. It signed memoranda with India’s Centre for Development of Advanced Computing to co-develop hybrid systems, and with Montana State University, which now houses a 9-qubit Rigetti Novera processor for academic research. These partnerships serve more as evidence of outreach than revenue. They fit a pattern of incremental grants and collaborations that provide validation but not growth.

The Air Force contract is typical. The project, conducted with Dutch startup QphoX, aims to convert microwave signals from superconducting qubits into optical photons, enabling future quantum networks. The ambition is credible—quantum networking could one day link distant quantum computers—but the payoff lies far beyond Rigetti’s current horizon. It’s research, not commerce.

Economically, Rigetti’s fundamentals resemble an early biotech company without the drug trials. Revenue is irregular, dominated by government contracts, while expenses are steady and high. Research and development reached $15 million last quarter, roughly eight times gross profit. The company’s price-to-sales ratio, above 1,000 by some measures, places it among the most inflated equities on the market. Even IonQ (IONQ: NYSE), the sector’s best-funded peer, trades at a fraction of that multiple.

Rigetti’s filings acknowledge the obvious: the company has a “limited operating history,” “a history of operating losses,” and may never achieve “quantum advantage.” The language reads less like legal boilerplate than confession. Yet management continues to promise breakthroughs at regular intervals—100 qubits this year, 150 next, 1,000 by 2027—as if calendar years could bend the laws of physics.

The commercial use cases remain abstract. Quantum computers might someday accelerate molecular modeling, materials science or cryptography. But even optimistic analysts admit that useful applications will require thousands of stable qubits, far beyond today’s machines. Until then, Rigetti sells time on systems that can’t outperform classical computers. The company’s quantum cloud is therefore less a product than a platform for experimentation, a sandbox for algorithms that might one day matter.

Rigetti’s bet is that being early matters—that vertical integration and in-house fabrication will pay off once the technology matures. It’s a defensible argument. The company’s Fab-1 facility gives it control over design iterations and intellectual property, which could be valuable if the field converges on its superconducting approach. But the same structure limits flexibility. Competitors like IBM (IBM: NYSE), Alphabet (GOOG: NASDAQ) and Amazon (AMZN: NASDAQ) treat quantum as a long-term research project, not an existential bet. Rigetti competes against companies for whom profitability is optional.

The company’s financial health depends on the endurance of that cash balance. As of November, it held about $600 million—enough to fund several years of losses at the current burn rate. But dilution is inevitable. The share count already exceeds 330 million, up from 285 million earlier in the year, inflated by warrant exercises and stock-based compensation. If quantum advantage remains elusive, Rigetti’s most reliable source of output may be new shares.

In that sense, Rigetti’s public life has been a physics experiment of its own: a demonstration of how long a company can maintain coherence between promise and performance. Its 2021 SPAC merger was justified on the expectation that quantum computing would soon cross from theory to market. Four years later, the technology is still beautiful and useless in roughly equal measure.

Still, the company has built something real. The hardware works, at least in the lab. Its qubits can perform gate operations with measurable fidelity. The engineers understand what must be improved. What’s missing is proof that any of it matters outside a research context.

The deeper issue is timing. Quantum computing may well transform information science, but it’s unclear when. Investors once said the same about fusion energy. Decades of incremental progress have yet to produce a marketable reactor. Quantum may follow the same trajectory: inevitable, but always a decade away.

Rigetti’s filings try to hedge that uncertainty with language about “hybrid quantum-classical systems” and “potential near-term advantages.” It’s an appeal to pragmatism, suggesting the company could find intermediate value before full quantum supremacy arrives. That could mean integrating quantum processors into classical workflows, or selling hardware to governments and universities as research tools. Yet those markets are small, and the competition treats them as side projects.

What the company has now is time and visibility. Quantum computing occupies a unique place in the public imagination, straddling science fiction and national strategy. Governments fund it as a hedge against falling behind China; investors fund it as a hedge against missing the next semiconductor moment. Rigetti sits at that intersection, sustained by belief.

The risk is that belief, once measured in qubits, will be measured in quarters. If progress slows, if fidelity gains plateau, if customers fail to materialize, the narrative collapses. The technology may survive in academic form, but the company may not.

For now, Rigetti continues to publish its roadmaps, raise its money, and build its machines in the hope that physics and finance will converge. Its future depends on whether coherence—the defining problem of quantum mechanics—can be achieved not just in circuits, but in strategy.

Tweet O’ The Week

Epistrophy In The News

I was quoted in Business Insider about OpenDoor (OPEN:NASDAQ) and the companies financial alchemy that the CEO hopes will hurt short sellers.

On Schwab Network with Nicole Pettelides we discussed quantum computing stocks, in particular Regetti (which led to the Rigetti piece above). I used the metaphor: “Buying a random ‘quantum’ stock because you believe in quantum computing is like eating Church’s Fried Chicken because you believe in organized religion. It’s not the same thing.”

Then on NewsNation with the great Laura Ingle we discussed the falling market, the cost of the government shutdown and the role of Agentic AI.

📆 of Epistrophy Events

Availability This Week

VACATION!

After a visit with a new client in Sydney, Australia, I’m taking the rest of the week off — the longest vacation in two years and I’m excited.

I’ll be back Thanksgiving week!

As always, written reports are available to clients, with video summaries on YouTube, and of course our popular summaries of the summaries on Instagram, TikTok, and YouTube Shorts.