The future of technology, according to Bernstein analyst Mark Newman, lies in the revolutionary power of quantum computing. While it may be too early to definitively name the ultimate victors in this rapidly evolving field, Newman has pinpointed two companies, Rigetti Computing (RGTI) and Infleqtion (INFQ), as possessing significant upside potential.
In a recent note to clients, Bernstein's analysis suggests that quantum computing won't replace traditional hardware but will act as a specialized accelerator. Newman envisions a future computing architecture comprising CPUs, GPUs, and QPUs (quantum processing units). The current landscape is a mix of specialized pure-play companies and tech giants like IBM, Google, Microsoft, and Intel. However, Bernstein emphasizes that the industry is still in its nascent stages, and a "winner-take-all" scenario is unlikely due to the varied strengths and trade-offs of different quantum modalities.
"We believe the market is unlikely to be winner-take-all," Bernstein stated. "Different modalities bring distinct strengths and tradeoffs, which should make certain architectures better suited for specific use cases, workloads, and time horizons. Some may be better positioned for near-term commercial relevance, while others may offer the stronger long-term path to scaled, fault-tolerant quantum computing."
Newman's analysis highlights RGTI and INFQ, noting that their current valuations appear to underprice their long-term market share potential. "RGTI and INFQ stand out to us: while RGTI is tied to superconducting and INFQ to neutral atoms, our framework indicates that current valuations imply only about 4% and 2% long-term market share, respectively," Newman wrote. "Put differently, the market does not appear to be pricing in significant [market] share for either company today, so if either ultimately captures larger market opportunity, the upside could be meaningful." This presents a favorable risk-reward scenario for investors looking to gain exposure to leading quantum technologies at attractive valuations.
Rigetti Computing (RGTI)
Rigetti Computing is focusing on superconducting quantum computing technology. Mizuho reiterated its "outperform" rating on Rigetti shares in April, citing the company's ongoing refinement of its chiplet superconducting technology. Rigetti is also well-capitalized, holding approximately $590 million in cash and equivalents at the end of last December. A recent sale of its 9-qubit Novera QPU to the University of Saskatchewan offers potential for near-term optimism as the company scales its technology towards 1,000 qubits.
Infleqtion (INFQ)
Infleqtion leverages neutral-atom technology and has found success by intersecting quantum sensing with quantum computing, enabling revenue generation and technological advancement. Analysts at Citigroup and BTIG initiated coverage with a "buy" rating in April. Citigroup's price target implies a 37% rally from Infleqtion's recent closing price, while BTIG's forecast suggests a 51% upside. A key development for Infleqtion is its partnership with AI chipmaker Nvidia, which involves integrating Infleqtion's Sqale neutral-atom quantum computer with Nvidia's AI supercomputers. Citi analyst Atif Malik views this partnership as a significant validation of Infleqtion's technology, positioning its software solutions to address current AI use cases and future quantum applications.
Year-over-year, Rigetti's shares have surged 93%, while Infleqtion, which went public last July, has seen a 39% increase in the past three months.
