Rackspace (RXT) Stock Surges 75% After Q1 Earnings Beat and AMD Partnership

TLDR

• Rackspace (RXT) stock surged over 60% in morning trading after Q1 earnings and an AMD partnership announcement
• Revenue hit $678M, beating estimates of ~$667-675M, up ~2% year-over-year
• EPS missed at -$0.06 vs. expected -$0.03, but net income swung to $8.3M from a -$71.5M loss a year ago
• Rackspace and AMD signed an MOU to build a governed Enterprise AI Cloud for regulated industries
• Full-year 2026 guidance reaffirmed at $2.6–$2.7B revenue; the AMD deal remains preliminary with no binding agreements

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Rackspace Technology stock exploded higher on May 7, 2026, surging over 60% in morning trading and hitting a session high of $4.12, after the company dropped its Q1 2026 earnings and a surprise partnership deal with AMD at the same time.

Rackspace Technology, Inc., RXT

The stock had been trading as a beaten-down turnaround story before today. The average analyst price target heading into the print was just $1.93. Safe to say, the Street got caught off guard.

Q1 revenue came in at $678.1 million, up 1.9% year-over-year, and ahead of consensus estimates of around $667–$675 million. Operating profit grew 20% year-over-year to $31 million.

Net income swung to $8.3 million, compared to a loss of $71.5 million in the same period last year. That turnaround was helped by a $55.8 million gain on debt extinguishment. Adjusted EBITDA rose to $71.2 million.

EPS did miss, coming in at -$0.06 versus the expected -$0.03. Gross profit margin also slipped to 18.3%, down 160 basis points year-over-year.

The company also repurchased around $96 million of debt, reducing interest expense and continuing its deleveraging push.

AMD Partnership Steals the Show

Alongside earnings, Rackspace and AMD announced a Memorandum of Understanding to build what they’re calling a new category: governed Enterprise AI Cloud infrastructure built for regulated industries and sovereign workloads.

The plan involves AMD Instinct GPUs and EPYC CPUs integrated into a fully managed stack, with Rackspace owning everything from silicon to outcomes. That’s a direct contrast to the standard hourly GPU rental model that dominates the market today.

CEO Gajen Kandiah said regulated enterprises are making deliberate choices about where their AI runs and who is accountable for it, positioning Rackspace as the company built to lead that category.

It’s worth flagging that the MOU is not a binding agreement. Discussions are still preliminary, and no definitive deals have been signed.

Other Catalysts From the Earnings Call

The Palantir partnership also got a mention on the call, with the first joint deal now closed and a strong pipeline in place.

Full-year 2026 guidance was reaffirmed, with Rackspace forecasting total revenue of $2.6–$2.7 billion and Non-GAAP Operating Profit of $160–$170 million.

The broader market provided no real tailwind for the move. The S&P 500 was up just 0.08%, the Dow gained 0.14%, and the Nasdaq edged up 0.26% on the day.

Analyst ratings heading into earnings were cautious — four Hold ratings and one Sell. Those targets are now well below where the stock is trading.

RXT has a beta of 2.24, so sharp moves in either direction are part of the deal with this one.

Insider activity over the past six months showed nine open-market trades, all of them sales.

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