SAN ANTONIO, May 7, 2026, 09:09 (CDT)
- Rackspace and AMD have inked a memorandum of understanding to develop a managed enterprise AI cloud, targeting clients in regulated industries.
- Rackspace posted revenue gains for the first quarter and turned a net profit, but operating losses persisted.
- Investors driving the stock higher should note: the agreement’s still just preliminary and non-binding.
Shares of Rackspace Technology soared roughly 57% Thursday morning, lifted by news of a multiyear partnership with Advanced Micro Devices to develop managed AI infrastructure for regulated industries. The company also swung back to a quarterly net profit. RXT changed hands at $3.56, having earlier hit $4.21. AMD was off about 1.4%, last quoted at $415.57.
Timing is key here. Businesses aren’t just tinkering with AI anymore—they’re deploying these tools in production, where uptime, data sovereignty, and legal exposure become pressing headaches. Rackspace and AMD are pitching their “Enterprise AI Cloud” at exactly that crowd: regulated firms and so-called sovereign workloads, meaning setups where laws or policies demand strict control over where data sits or how it moves. Rackspace Technology
Rackspace, through this deal, tightens its AI pitch just as the market heats up for anything linked to compute power. AMD shares soared to fresh highs Wednesday, boosted by an upbeat forecast that underscored surging demand for AI infrastructure. Analysts highlighted AMD’s drive to expand from GPUs into the wider CPU-and-GPU compute segment.
Rackspace, under the terms of the memorandum, is set to fold AMD Instinct GPUs and EPYC CPUs into a managed offering—bare-metal compute, inference tools, plus service-level agreements that lock in both performance and uptime. Here, “inference” refers to deploying already-trained AI models for practical use, rather than just the training stage. GlobeNewswire
Rackspace CEO Gajen Kandiah said regulated enterprises are making “deliberate choices” about where AI runs and who is accountable for it. He didn’t mince words on governed AI infrastructure, calling it “not something you bolt on.” That was aimed at banks, healthcare, utilities, and public-sector buyers—industries that can’t simply treat AI as just another cloud add-on. GlobeNewswire
Dan McNamara, AMD’s senior vice president and general manager for compute and enterprise AI, said the partnership aims to drop AMD AI compute straight into governed, private, managed settings. The offer isn’t complicated: customers supply their data and workloads, while Rackspace shoulders a bigger share of the infrastructure lift.
Rackspace shares got a boost after the company posted first-quarter revenue of $678.1 million, a 1.9% gain on the year. Public cloud sales climbed 6.7% to $443.4 million. Not all lines performed: private cloud revenue dropped 6.0% to $234.7 million, highlighting ongoing challenges for that legacy segment.
Net income landed at $8.3 million, or 3 cents a share on a diluted basis—quite a turnaround from last year’s $71.5 million loss. Still, the story isn’t straightforward. Rackspace’s operating loss came in at $17.8 million this quarter. The bottom line got a big lift from a $55.8 million gain tied to debt extinguishment.
Rackspace is projecting 2026 revenue between $2.6 billion and $2.7 billion, with adjusted EBITDA expected in the $305 million to $315 million range. Adjusted EBITDA, which the company defines as operating earnings prior to interest, taxes, depreciation, amortization and certain other items, is a metric favored by investors—though it differs from net profit as recognized by standard accounting.
No letup in rivalry this week. AMD continues its push to close the gap with Nvidia on AI chips, and investors are piling into Intel, Arm and Qualcomm as well, betting that the need for AI compute won’t stay bottled up with one supplier. “Success invites competition,” said JonesTrading’s Michael O’Rourke. For Matt Britzman at Hargreaves Lansdown, AMD is now “a broader compute opportunity,” he told Reuters. Reuters
Rackspace sees an opening here, but it’s a double-edged sword. The new service would slot the company between chipmakers and businesses unwilling to piece together their own AI setups. Trouble is, giants like the major cloud providers and server manufacturers are after that same pot of enterprise dollars.
The more pressing issue: Rackspace and AMD’s memorandum isn’t binding yet. Rackspace disclosed that nothing is finalized—negotiations are still in early stages, and the company could struggle to secure third-party financing on favorable terms if it moves ahead.
Right now, investors see AMD’s name and Rackspace’s improved quarter as signs that the AI turnaround story finally has some direction. What matters next: Will that non-binding framework actually translate into real enterprise deals, or just end up as the latest AI infrastructure headline?
