Rigetti Computing (RGTI -3.29%) has had a phenomenal July, with the stock up around 40% at the time of writing, although it was up around 50% just a few days ago. Most investors would be pleased with that return over a multiyear time frame, let alone one year. However, considering the reason behind Rigetti Computing's rapid rise, this could be the beginning of an even larger movement.

Last week, Rigetti announced a breakthrough with its Ankaa-3 system, which caused shares to soar on the announcement. This spike wasn't for nothing. Rigetti announced a real breakthrough that could vault it into the leadership position in the quantum computing race.

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Rigetti's breakthrough shows it's on the right track

Rigetti Computing announced that its Ankaa-3 system, which is composed of four 9-qubit chips, achieved a 99.5% two-qubit gate fidelity. This means that when a two-gate calculation is run, the computer delivers the correct answer 99.5% of the time. While this sounds impressive, it's still several orders of magnitude away from the accuracy of traditional computing, which is the fundamental problem companies in the quantum computing race are facing.

Instead of bits that use a 0 or 1 to transmit information, quantum computers utilize qubits, which are better described as the probability of an answer being a 0 or a 1. While the information collapses to a 0 or a 1 at the end of a computation, this can lead to some errors, which is why increasing accuracy is a key problem that these quantum computing companies must solve.

According to Rigetti Computing, its system is the largest multichip quantum computer available, vaulting it into a leadership position in this regard. However, there are several competitors with better two-qubit gate fidelity scores, so Rigetti Computing still has some work to do in this area.

Regardless, Rigetti Computing has made a significant breakthrough, demonstrating progress toward the practical relevance of quantum computing. However, how long will investors have to wait before it becomes a reality?

Rigetti's stock is a high-risk, high-reward investment

Prior to 2030, Rigetti Computing estimates that the annual demand will range from $1 billion to $2 billion, mostly driven by research institutions. After 2030, this market is expected to experience significant growth, with annual demand projected to reach $15 billion to $30 billion. The 2030 date isn't unique to Rigetti Computing; nearly every other quantum computing competitor has circled this date as a turning point within the quantum computing industry.

That's a long time from now, but is the market opportunity worth buying and holding a stock like Rigetti's?

Currently, Rigetti Computing has a market capitalization of approximately $5 billion. If it can capture a fraction of the market opportunity by 2030, say $2 billion, then its stock easily has room to double, if not triple, from today's prices.

A double or triple in the investing world over a five-year time frame is a phenomenal return, making this an attractive investment opportunity. However, there is another factor investors must be aware of.

Rigetti Computing's technology may fail in the future or be surpassed by another company offering similar technology. Because there is no backup plan for Rigetti Computing, this could cause the stock to fall to zero. Investors must be aware of the risk-reward profile with Rigetti's stock, as it could become worthless as easily as it doubles or triples.

As a result, quantum computing investors should ensure that a single company doesn't make up more than a 1% position within a portfolio. That way, if it goes to $0, it won't have as significant an impact on your returns. But if it doubles or triples, it can still have a sizable impact.

Time will tell if Rigetti Computing's strategy is a winning one, but its latest breakthrough shows investors that it's on the right track.