Quantum computing stocks faced a reality check on 14 February 2026 when TD Cowen analyst Krish Sankar downgraded Rigetti Computing Inc (NASDAQ: RGTI) from Buy to Hold. The move sent RGTI shares down 8.8 per cent and highlighted risks that investors may be overlooking. Sankar cited funding needs, competitive pressure, and elevated valuations as reasons for the shift.
Figure 1: Rigetti Computing Inc logo. [Source: Wikipedia]
This article examines what the downgrade signals, why Big Tech poses a hidden threat, and what investors should monitor as the sector matures.
Why TD Cowen Downgraded Rigetti Computing
Krish Sankar, a five-star analyst on TipRanks, ranked number 40 out of 12,108 analysts tracked, downgraded Rigetti from Buy to Hold. He has a 66 per cent success rate and an average return per rating of 41.90 per cent. Sankar kept forecast estimates unchanged and did not assign a price target.
The analyst views RGTI as offering balanced risk-reward but notes the Company trades at a premium relative to peers like IonQ Inc (NASDAQ: IONQ) and D-Wave Quantum Inc (NASDAQ: QBTS). The impact of analyst downgrade on stocks was immediate, with shares plunging 8.8 per cent.
Three Core Risks Facing Quantum Computing Stocks
Rigetti may need a new fabrication facility around 2028 to push chip fidelity above 99.9 per cent. A new 200 or 300 millimetre fab could cost over $300 million. The Company holds $525 million in cash against a yearly burn rate of $70 million to $80 million. The recent 108-qubit QPU delay underscores quality risks at scale.
Figure 2: Superconducting quantum processor. [Source: Yahoo Finance]
Rigetti missed selection for DARPA’s Quantum Benchmarking Initiative Stage B program. QBI tests quantum technology for utility-scale use, with Stage B offering over $1 million quarterly funding versus Stage A’s $0.3 million. Missing this reduces access to multi-year quantum funding opportunities and increases competitive pressure.
RGTI trades at an enterprise value-to-sales multiple of 255x, compared to IONQ’s 205.7x and QBTS’ 167x. Sankar views consensus 2027 revenue estimates as overly aggressive given limited visible opportunities. Elevated valuations amplify downside risk if commercialisation timelines slip.
The Market Opportunity Driving Investor Interest
Quantum computers can create between $450 billion and $850 billion in global economic value by 2040, based on a forecast from Boston Consulting Group. Pure-play names including IonQ, Rigetti, D-Wave Quantum, and Quantum Computing Inc rallied by as much as 6,200 per cent over the trailing 12-month period as of mid-October 2025.
Applications span drug development, cybersecurity, and artificial intelligence optimisation. Amazon and Microsoft quantum cloud services both allow subscribers access to IonQ and Rigetti quantum computers. JPMorgan Chase unveiled its $1.5 trillion Security and Resiliency Initiative in mid-October 2025, identifying quantum computing as one of 27 sub-areas for investment over the next decade.
Why Big Tech Poses the Biggest Threat
Cash-rich members of the Magnificent Seven could easily enter and dominate. While pure-play quantum computing stocks have a first-mover advantage, the barrier to entry is not high. Companies like Amazon, Microsoft, Meta Platforms, and Alphabet generate substantial cash and invest aggressively in game-changing innovations.
Figure 3: Quantum computing cryostat used for large-scale quantum experiments. [Source: New Scientist]
Alphabet unveiled its Willow quantum processing unit in December 2024. In October 2025, Alphabet announced that Willow ran a quantum computing algorithm approximately 13,000 times faster than the speediest supercomputer. Microsoft debuted its Majorana 1 QPU two months after Willow launched.
The Magnificent Seven have profitable foundations, extensive treasure chests, and can expand through acquisitions. By the time quantum computers become cost-effective for practical problem-solving, there is a real risk that pure-play names become yesterday’s news.
Share Dilution Adds Execution Pressure
Quantum computing stocks collectively issued more than $4.1 billion in common stock and warrants in 2025 to raise capital. Since operating models remain unproven, Companies will likely continue leaning on share issuances to fund operations. This dilutes existing shareholders.
Rigetti’s $525 million cash position against a $70 million to $80 million yearly burn provides runway, but the need for a new fab by 2028 could force additional capital raises.
What Investors Should Track
Monitor capital burn rates and cash runway. Track customer contract announcements and revenue visibility beyond 2027. Watch for Big Tech quantum hardware launches that could shift competitive dynamics. Compare enterprise value-to-sales multiples across RGTI, IONQ, and QBTS.
Figure 4: Defense Advanced Research Projects Agency (DARPA) branding. [Source: GovCon Wire]
Set alerts for DARPA program selections and government funding awards. Document milestones like qubit count increases and fidelity improvements. Review quarterly share issuance activity to track dilution trends.
Final Thoughts
TD Cowen’s downgrade of Rigetti on 14 February 2026 exposed risks quantum computing stocks face as the sector matures. Funding requirements for advanced fabrication, competitive pressure from DARPA program selections, and elevated valuations all justify caution. Yet the biggest threat may be Big Tech’s entry into the quantum computing stock market.
Alphabet and Microsoft have already launched quantum processing units and demonstrated performance advantages. Their cash reserves and acquisition capabilities pose existential risk to pure-play quantum computing stocks with unproven business models and ongoing dilution. The market opportunity remains substantial, with up to $850 billion in economic value possible by 2040. However, investors should track capital burn rates, customer visibility, Big Tech moves, and valuation multiples before adding exposure.
FAQs
Q1. Why did TD Cowen downgrade Rigetti Computing?
 Ans. TD Cowen analyst Krish Sankar downgraded RGTI from Buy to Hold on 14 February 2026, citing higher risks from new fab funding needs and greater competitive headwinds.
Q2. What is the biggest risk for quantum computing stocks?
 Ans. Big Tech entry poses the largest threat. Companies like Alphabet and Microsoft have launched quantum processing units and possess cash reserves and acquisition capabilities that pure-play names lack.
Q3. How much did quantum computing stocks rally in 2025?
 Ans. Pure-play quantum computing stocks rallied by as much as 6,200 per cent over the trailing 12-month period as of mid-October 2025.
Q4. What should investors watch in quantum computing stocks?
 Ans. Monitor capital burn rates, customer contracts, Big Tech quantum launches, valuation multiples, DARPA program selections, and quarterly share issuance activity.
