Rackspace Technology stock surges 30% as AMD partnership brings 30MW of AI compute infrastructure

Why Wall Street Is Turning Bullish On Rackspace Stock After Its AI Pivot - Rackspace Technology (NASDAQ:R

Rackspace Technology Inc. (NASDAQ:RXT) is getting back into the good graces of investors. The cloud computing company saw its share price soar in recent weeks after announcing its commitment to expanding its involvement in artificial intelligence (AI). In particular, on June 16, Rackspace saw its shares skyrocket when it announced its partnership with semiconductor manufacturer AMD and its plans for cost-cutting measures and investing in AI infrastructure. The move marks a significant shift for a company that has spent years struggling with slowing growth. AMD Deal Gives Rackspace a Big AI Opportunity The biggest reason behind the recent excitement is Rackspace's new agreement with AMD. The company will deploy up to 30 megawatts of AMD-powered computing capacity across its global data centers. The rollout is expected to begin later this year and continue through 2028. The deal includes AMD's latest AI chips and EPYC processors, which will help Rackspace provide powerful computing services for businesses building and running AI applications. Demand for AI infrastructure has exploded over the past year. Companies across industries are looking for more computing power to support AI tools, automation, and large-scale data processing. Rackspace says the new infrastructure will be used by enterprise customers, especially in industries like healthcare where secure and reliable AI systems are becoming increasingly important. CEO Gajen Kandiah described the strategy as providing governed AI environments where businesses have a single operator accountable for outcomes rather than multiple vendors handling different parts of the process. Rackspace Is Cutting Costs to Invest in AI Alongside the AMD announcement, Rackspace also revealed plans to cut about 15% of its global workforce. The company said the move is part of a broader effort to shift resources away from older business areas and focus more on AI-related services. Most of the job cuts will come from legacy cloud operations, while the savings will be invested in AI infrastructure, engineering, and customer solutions. Rackspace expects to spend between $14 million and $19 million on restructuring costs. However, the company believes the changes will generate annual savings of between $75 million and $85 million. Many investors see this as a positive step because it shows management is willing to make difficult decisions to support future growth. Some traders also believe the savings could help Rackspace better manage its debt burden. Wall Street Is Becoming More Optimistic Analysts are also starting to take a more positive view of Rackspace. UBS recently raised its price target on the stock for the second time in less than a month. The bank first increased its target from $2 to $5 before raising it again to $5.50. Although UBS still rates the stock as "Neutral," the higher target suggests the firm sees improving business momentum. Analysts have pointed to Rackspace's growing AI business, cloud services growth, and expansion into markets like the Middle East as reasons for the more positive outlook. Investor sentiment has improved dramatically as a result. Rackspace shares have surged more than 500% in 2026, making it one of the year's biggest turnaround stories. The excitement is not limited to Wall Street analysts. Options traders have also been piling into the stock. On June 16, more than 42,000 Rackspace options contracts changed hands. Most of that activity came from call options, which are often used by traders who expect a stock to move higher. Nearly 39,000 call contracts were traded compared to fewer than 4,000 put contracts. The heavy call buying suggests many traders believe Rackspace could continue its strong run if the company successfully executes its AI strategy. The AI Story Goes Beyond AMD The AMD partnership is important, but it is not the only AI project Rackspace is working on. The company has also partnered with Palantir to help businesses deploy AI applications. It continues to work with major technology companies including NVIDIA, AMD, Amazon Web Services, Microsoft, and Google Cloud. Rackspace serves more than 20,000 customers worldwide, including businesses in healthcare, government, and other highly regulated industries. This gives the company a large customer base that could potentially adopt its AI services in the coming years. As more businesses look for secure and private AI solutions, Rackspace hopes to become a trusted provider of the infrastructure needed to run those systems. Risks Still Exist Despite the recent rally, Rackspace still faces challenges. The company generated about $2.69 billion in revenue over the last year, but profits remain weak. Gross margins are around 18.5%, while overall profitability remains under pressure. Debt is also a major concern. Rackspace carries roughly $3.05 billion in long-term debt and still has negative shareholder equity. While the company reported a small net profit of $8.3 million in the first quarter and positive operating cash flow of $5.1 million, its financial position remains far from perfect. That is one reason some analysts remain cautious despite the recent stock surge. Using the Heikin Ashi strategy, market watchers are now mapping the stock's potential next move. This comes as the approach helps smooth out price noise and makes underlying trends easier to spot on the chart. Meanwhile, Wall Street's growing interest in Rackspace comes down to one thing: AI. Investors are starting to see it as a company trying to build a bigger role in enterprise AI infrastructure. There are still risks, especially around debt and profitability. But the potential rewards from a successful AI transformation are becoming hard to ignore. Benzinga Disclaimer: This article is from an unpaid external contributor. It does not represent Benzinga's reporting and has not been edited for content or accuracy. Market News and Data brought to you by Benzinga APIs To add Benzinga News as your preferred source on Google, click here.

Rackspace Technology stock surges 30% on AMD AI compute deal By Investing.com

Investing.com -- Rackspace Technology (NASDAQ:RXT) shares rose 30% Tuesday after the company signed a definitive agreement with AMD (NASDAQ:AMD) for the phased deployment of 30 MW of AMD-based AI compute infrastructure. The agreement operationalizes a Memorandum of Understanding announced May 7, 2026, and establishes AMD as a strategic technology partner for Rackspace's governed AI stack. The deployment will occur across Rackspace's global data centers beginning in late 2026 through 2028. The collaboration will incorporate AMD Instinct GPUs, including MI355X and MI350P models, along with AMD EPYC CPUs within an integrated Enterprise AI Cloud architecture. The infrastructure is designed to serve regulated enterprise workloads, with healthcare providers expressing early interest in accelerated compute for clinical AI and inference at scale. "Enterprises in regulated industries need AI infrastructure that is governed from the ground up, with one operator accountable for business outcomes, not a collection of vendors each owning a piece," said Gajen Kandiah, CEO of Rackspace Technology. Both companies plan to dedicate sales and marketing resources to identify enterprise customers for AMD compute-powered infrastructure, with personnel from each company jointly developing customer opportunities across regulated industries. The agreement will accelerate delivery of four integrated capabilities: Enterprise AI Cloud, Enterprise Inference Engine, Inference as a Service, and Bare Metal AMD Instinct. The companies aim to establish a new category of managed enterprise AI infrastructure targeting enterprises moving from AI experiments to agentic workflows within core enterprise systems.

AMD, Rackspace Strike Deal to Deploy 30MW of AI Compute

AMD has struck a deal with Rackspace Technology to deploy 30 megawatts of artificial intelligence computing power across Rackspace's data centers, expanding AMD's enterprise AI ambitions. The two companies signed an agreement for the phased deployment of an initial 30-megawatt footprint dedicated to AMD-based compute deployments across Rackspace's global data centers, starting later this year through 2028. The agreement finalizes a deal the two companies outlined in May and makes AMD a key technology partner in Rackspace's AI platform, the companies said Tuesday. The deal comes as big tech companies race to build out AI infrastructure at breakneck speed, with companies like AMD pouring billions into new chips and compute capacity while hyperscalers such as Google, Amazon and Microsoft rapidly expand their own data-center footprints. The news sent Rackspace's stock soaring in premarket trading, up 18% ahead of the morning bell at $6.96. The surge in demand for accelerated computing is being driven by generative AI, large-scale inference and emerging agentic systems, triggering a scramble for power and space to run the processes. Rackspace's planned 30-megawatt deployment of AMD hardware is pitched as meaningful capacity for regulated industries such as healthcare, where providers have already expressed early interest in accelerated compute from clinical AI, they said. The companies said they will jointly pursue enterprise customers and accelerate development of four planned offerings, which are Enterprise AI Cloud, Enterprise Inference Engine, Inference as a Service and Bare Metal AMD Instinct.