Rackspace Announces Deployment of AMD AI Chips
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 4 days ago
0mins
Source: NASDAQ.COM
- Compute Capacity Expansion: Rackspace announced an expanded partnership with AMD to deploy 30 MW of compute capacity from 2026 to 2028, primarily targeting enterprise clients in highly regulated industries like healthcare, thereby enhancing its competitive position in the cloud computing market.
- Workforce Reduction: The company will reduce its workforce by 15%, expected to save between $75 million and $85 million annually, a move aimed at lowering operating costs and refocusing on AI-related services in response to only 2% revenue growth and slight operating losses over recent quarters.
- Stock Price Volatility: Although Rackspace's stock has surged over 540% this year, it remains below its IPO price of $21 from 2020, reflecting market caution regarding its future profitability while also indicating speculative potential as a small-cap stock.
- Market Risks: Rackspace carries significant debt, and while the partnership with AMD may provide a turnaround opportunity, it remains to be seen if it can genuinely accelerate profitable growth, especially amid increasing risks of data leakage.
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Analyst Views on RXT
Wall Street analysts forecast RXT stock price to fall
3 Analyst Rating
0 Buy
3 Hold
0 Sell
Hold
Current: 7.530
Low
1.30
Averages
1.48
High
1.75
Current: 7.530
Low
1.30
Averages
1.48
High
1.75
About RXT
Rackspace Technology, Inc. is an end-to-end hybrid, hybrid cloud, and artificial intelligence (AI) solutions company. The Company designs, builds, and operates its customers’ cloud environments across all technology platforms, irrespective of technology stack or deployment model. The Company operates through two segments. Its Public Cloud segment is a service-centric, capital-light model providing value-added cloud solutions through managed services, elastic engineering and professional services offerings for customer environments hosted on the Amazon Web Services (AWS), Microsoft Azure and Google Cloud public cloud platforms. Its Private Cloud segment is a technology-forward, capital-intensive model providing managed service offerings for customer environments hosted in one of its data centers as well as in those owned by customers or by third parties. Private Cloud product portfolio includes Programmatic Infrastructure, Cloud Operating Systems, Platform-as-a-Service, and others.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- ARM Stock Hits New High: ARM shares climbed to $444.80, a 52-week high, after Bernstein raised its price target from $300 to $500, citing its growing role in powering agentic AI workloads, with a projected revenue of $22 billion by 2030.
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- Cost-Cutting Measures: Rackspace plans to implement a 10% workforce reduction to save up to $85 million annually, with part of the savings earmarked for engineering talent and AI solution development, thereby reinforcing its long-term AI strategy.
- NBIS Expansion Optimism: Nebius Group's shares jumped to $297.93 on Wednesday as investors rewarded its rapid expansion in AI cloud infrastructure, with expectations of joining the Nasdaq 100 Index this month further boosting market confidence.
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- Positive Market Reaction: Following the signing of the U.S.-Iran peace agreement, U.S. stock futures rose broadly, with S&P 500 futures up about 0.81%, reflecting market optimism about future economic improvements, particularly against the backdrop of energy prices and inflation pressures.
See More
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- Inflation Outlook Adjustment: The Fed raised its inflation forecast for the end of 2026 to 3.6% from 2.7% in March, indicating persistent inflationary pressures due to rising oil prices and a strong labor market, which could influence future monetary policy decisions.
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See More
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- Price Target Increase: RBC Capital raised Rackspace's stock price target from $2.50 to $4, with analyst Daniel Perlin noting that this partnership supports Rackspace's goal of becoming a leading enterprise AI provider, contributing to a more than 35% stock price increase over the past three days.
- Cost Reduction and Restructuring: Rackspace has reduced its workforce by approximately 10% to lower costs, anticipating up to $19 million in one-time restructuring charges while generating annual savings of up to $85 million, with part of these savings earmarked for investment in engineering talent and AI solutions.
- Retail Sentiment Turns Bullish: Retail sentiment on Stocktwits regarding Rackspace shifted from 'bullish' to 'extremely bullish', accompanied by extremely high message volumes, indicating strong institutional buying activity that has propelled the stock to a more than 730% increase this year.
See More
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- Stock Price Surge: Rackspace shares rallied by 21.2% on Tuesday, settling at a 5% gain, reflecting a positive market response to its new strategy, although its market cap remains below $1.5 billion, indicating cautious optimism among investors regarding its future.
- Workforce Reduction: The company revealed a 15% workforce reduction, expected to save between $75 million and $85 million annually, aimed at refocusing on AI opportunities, despite only achieving 2% revenue growth last quarter and still facing slight operating losses.
- Risks and Opportunities: Although Rackspace's stock has surged 543% in 2026, it still faces significant debt and market uncertainties, making future profitable growth uncertain, thus investors should approach with caution.
See More
