Why Rackspace Technology Stock Doubled This Morning

Rackspace Technology’s stock more than doubled on Thursday morning, peaking at a 103.5% gain near 10:50 a.m. ET, before settling at an 81.5% increase by late morning. The surge followed a mixed Q1 2026 earnings report, where revenue rose just 2% year-over-year to $678 million—slightly above analyst expectations of $675 million—while adjusted net losses remained steady at $0.06 per share, worse than the forecasted $0.03 loss. The company’s full-year guidance was unchanged, suggesting no immediate financial boost from its new strategic move. However, Rackspace CEO Gajen Kandiah announced a Memorandum of Understanding with Advanced Micro Devices (AMD) to establish a new market category: governed enterprise AI infrastructure. This partnership aims to provide purpose-built AI systems tailored for regulated industries, offering high security and performance at a premium. AMD’s recent strong earnings performance heightened investor interest in Rackspace’s collaboration, as the chipmaker’s momentum is reshaping market expectations. While revenue from the AMD deal won’t materialize until 2027, the stock’s rally reflects optimism about long-term growth potential. Analysts noted the stock remains undervalued at 0.4 times trailing sales, despite the speculative jump. The market’s reaction appears ahead of itself, as the earnings report itself showed limited near-term progress. Revenue growth was modest, and profit losses persisted, but the AMD partnership signals a pivot toward high-margin, specialized AI infrastructure. Whether this gamble pays off remains uncertain, but Rackspace’s stock is now trading on future bets rather than current performance.