New York, June 16, 2026, 10:05 EDT
- Rackspace Technology shares jumped after the company struck a definitive AI compute deal with AMD.
- Rackspace will deploy 30 megawatts of AMD-based compute capacity in its data centers under the deal, with installation set to start in late 2026 and run through 2028.
- But the rally isn’t without risk. Rackspace said it plans to cut 15% of its staff. AMD deployments still need financing and more commercial sign-offs, the company said.
Rackspace Technology, Inc. shares jumped about 13% to $6.66 in early Nasdaq trading Tuesday. The stock saw heavy volume, spiking to a session high of $7.82 after the company went from an AMD memorandum of understanding to a firm agreement for AI compute capacity. Trading pushed Rackspace’s market cap to around $1.7 billion with about 32.5 million shares changing hands.
AMD’s deal with Rackspace is the driver for the move. The companies said they plan to roll out a first 30 MW deployment of AMD-based computing in Rackspace’s global data centers starting late 2026 through 2028. In the data center world, megawatts are a stand-in for total high-performance compute supported. Rackspace and AMD said the new setup will use AMD Instinct GPUs for AI work and AMD EPYC CPUs for more general tasks.
Rackspace shares are jumping as the market takes the latest deal as proof its AI push is real. Barron’s said RXT shot up 25% in premarket and traded at $7.41 after the news. Shares have now soared over 500% in 2024, after being under $1 back in January. The company has worked to move its image away from slow-growth cloud services toward offering AI infrastructure for regulated sectors. Barron’s CEO Gajen Kandiah said regulated firms want AI setups “governed from the ground up.” AMD’s Dan McNamara cited the need for the “right mix of accelerated and general-purpose compute.” Rackspace Technology, Inc.
Rackspace bulls point to the AMD deal as giving the company a steadier product roadmap just when the market is paying up for cloud names. The last quarter gave signs the business is stabilizing: revenue in Q1 climbed 1.9% year over year to $678.1 million. Rackspace posted net income of $8.3 million after a $71.5 million loss a year ago. Adjusted EBITDA reached $71.2 million. Management sees 2026 revenue of $2.6 billion to $2.7 billion and adjusted EBITDA in a $305 million to $315 million range.
The bear case calls out how tough execution remains here. In a June 16 filing, Rackspace said it will cut about 15% of its global staff, expecting one-time charges between $14 million and $19 million but seeing annual run-rate savings of $75 million to $85 million. Run-rate savings is Rackspace’s projected yearly savings after the layoffs are fully in place. The company said much of that will go back into spots like forward-deployed engineering, AI solutions delivery, and enterprise AI infrastructure. Rackspace Technology, Inc. Rackspace finished Q1 with $2.71 billion in debt and only $93.6 million in cash. First-quarter interest expense was $26.2 million.
RXT isn’t looking outright cheap, more risky at this point. Its equity value is about $1.7 billion, sitting below the 2026 revenue target, which means the price-to-sales ratio comes off as reasonable for an AI-related name. But the hefty debt, slow underlying growth, ongoing restructuring, and the AMD deal’s conditions all complicate things. The stock’s next catalyst is whether Rackspace can get the AMD deal moving into actual funded deployments, real customer wins, and revenue. Rackspace said in a filing that every deployment needs its own terms, financing, and AMD signoff. AMD doesn’t have to accept any deal under the framework.
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