Rackspace stock up 16% after AMD AI deal, 15% cuts

Rackspace Technology shares rose about 16% after the company signed a definitive agreement with AMD to deploy up to 30 megawatts of dedicated compute capacity across Rackspace’s global data centers and announced plans to cut roughly 15% of its global workforce.

The phased AMD rollout is scheduled to begin in late 2026 and continue through 2028. Rackspace said the infrastructure will support enterprise AI workloads, with a focus on highly regulated industries such as healthcare where large-scale inference and governed environments are in demand. The company described the capacity as dedicated compute installed across its data-center footprint to provide customers with operator-managed AI infrastructure.

The workforce realignment will primarily affect legacy service delivery functions, particularly within Rackspace’s Public Cloud business, according to a regulatory filing. Most affected employees were notified around June 10. Additional reductions are expected over the next six months, subject to local regulations and job functions.

Rackspace estimated one-time restructuring charges of $14 million to $19 million tied mainly to severance, healthcare and other employee-related expenses. The company projected annualized run-rate savings of about $75 million to $85 million once the plan is fully implemented.

Investors reacted positively to the combination of the AMD agreement and the expected cost savings. Rackspace shares have climbed more than 500% so far in 2026, and the stock moved higher before Tuesday’s opening bell, though it remains below levels seen after the company returned to public markets in 2020 under Apollo Global Management.

The AMD agreement follows AMD’s acquisition of memory-optimization firm MEXT, a move the chipmaker has said is intended to address rising memory costs tied to AI computing. AMD shares have more than doubled this year amid growing demand for AI processors.

Gajen Kandiah, chief executive officer of Rackspace Technology, commented: “Enterprises in regulated industries need AI infrastructure that is governed from the ground up, with one operator accountable for business outcomes, not a collection of vendors each owning a piece.” Dan McNamara, senior vice president and general manager of Compute and Enterprise AI at AMD, noted: “As enterprise AI evolves, customers need infrastructure that can deliver the right mix of accelerated and general-purpose compute for each workload.”