Rackspace Technology (RXT) Is Up 210.2% After Returning To Profit And Unveiling AMD AI Cloud Deal – Has The Bull Case Changed?

• In early May 2026, Rackspace Technology reported first-quarter 2026 revenue of US$678.1 million and net income of US$8.3 million, marking a move back into profit from a net loss a year earlier.
• On the same day, Rackspace Technology and AMD announced a Memorandum of Understanding for a multiyear partnership to build a governed Enterprise AI Cloud tailored to regulated and sovereign workloads, expanding Rackspace’s role in managed AI infrastructure.
• Next, we’ll examine how Rackspace’s new AMD-backed Enterprise AI Cloud initiative may reshape its investment narrative around regulated workloads.

Find 51 companies with promising cash flow potential yet trading below their fair value.

Rackspace Technology Investment Narrative Recap

To own Rackspace today, you need to believe it can turn early AI and regulated-cloud momentum into steadier revenue while rebuilding margins and cash flow. The Q1 2026 return to a modest US$8.3 million profit and US$678.1 million in revenue helps the near term story, but shrinking legacy cloud revenues and pressured free cash flow remain the key risk to watch in the months ahead.

The new Memorandum of Understanding with AMD is especially relevant here, because it sits directly on the main potential catalyst: governed AI and compliant cloud services for regulated workloads. If Rackspace can translate this Enterprise AI Cloud concept into recurring, higher margin contracts, it would speak directly to its ambition to move away from lower margin resale toward more durable managed services.

Yet, despite these positives, investors should also be aware that...

Read the full narrative on Rackspace Technology (it's free!)

Rackspace Technology’s narrative projects $2.8 billion revenue and $179.0 million earnings by 2028.

Uncover how Rackspace Technology's forecasts yield a $2.17 fair value, a 61% downside to its current price.

Exploring Other Perspectives

Before this news, the most optimistic analysts were assuming revenue could reach about US$2.9 billion and earnings US$218.7 million by 2029, which is far more upbeat than consensus and leans heavily on AI driven margin gains that the new AMD partnership might either reinforce or call into question.

Explore 4 other fair value estimates on Rackspace Technology - why the stock might be worth as much as $5.63!

The Verdict Is Yours

Don't just follow the ticker - dig into the data and build a conviction that's truly your own.

• A great starting point for your Rackspace Technology research is our analysis highlighting 2 key rewards and 4 important warning signs that could impact your investment decision.
• Our free Rackspace Technology research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Rackspace Technology's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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