Rackspace Technology (RXT) Is Up 32.7% After AI-Focused Restructuring And AMD Data Center Deal - What's Changed

• Earlier in June 2026, Rackspace Technology approved a workforce realignment cutting about 15% of staff and incurring US$14,000,000–US$19,000,000 of one-off costs to shift resources from legacy public cloud services toward governed enterprise AI, while also signing a definitive agreement with Advanced Micro Devices for a phased 30 MW deployment of AMD-powered AI compute across its global data centers.
• This combination of workforce reshaping and silicon-level partnership with Advanced Micro Devices positions Rackspace to focus more tightly on regulated enterprise AI workloads, including healthcare use cases that require governed, accountable infrastructure.
• We’ll now consider how Rackspace’s cost-cutting realignment and AMD-backed AI infrastructure build influence the existing investment narrative.

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Rackspace Technology Investment Narrative Recap

To own Rackspace today, you need to believe its pivot from legacy cloud into governed enterprise AI can eventually offset declining cloud revenues and persistent losses. The latest workforce realignment and AMD-backed buildout directly affect the near term catalyst of improving margins and cash generation, while also tying into the biggest current risk that AI investments and cost cuts may not scale fast enough to counter ongoing revenue and margin pressure.

The AMD agreement for a phased 30 MW deployment of AMD Instinct GPUs and EPYC CPUs sits at the center of this story, because it underpins Rackspace’s push into regulated AI workloads where it is trying to differentiate. How effectively this silicon level partnership turns into recurring, higher margin enterprise AI contracts will be critical in judging whether the current AI pivot can justify the recent share price move.

Yet behind the AI story, investors should also be aware of the ongoing revenue declines and financial strain that could still...

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 70% downside to its current price.

Exploring Other Perspectives

While consensus focuses on gradual revenue pressure and execution risk, the most optimistic analysts were already penciling in about US$2.9 billion of 2029 revenue and US$210 million of earnings, so this AI heavy restructuring and AMD deal could either support that view or force a rethink depending on how the turnaround evolves.

Explore 5 other fair value estimates on Rackspace Technology - why the stock might be worth as much as $6.25!

Reach Your Own Conclusion

Disagree with existing narratives? Extraordinary investment returns rarely come from following the herd, so go with your instincts.

• A great starting point for your Rackspace Technology research is our analysis highlighting 1 key reward 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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