Rackspace Stock Extends Friday’s 54% Surge Into Monday on AI Pivot and Q1 Beat

Rackspace Technology shares are pushing higher Monday, Benzinga reported, building on a stunning 54% single-session surge from Friday. The stock hit a fresh 52-week high during that session. By Monday premarket, Rackspace Technology (NASDAQ: RXT) had added another 3.46%, trading near $5.68.

Q1 Revenue Beat Drives Initial Rackspace Stock Rally

The company posted first-quarter revenue of $678.1 million. That figure came in ahead of the Wall Street consensus estimate of roughly $660.8 million. Revenue grew approximately 2% compared to the same period a year earlier. Public cloud services led the way, with that segment climbing 7% to reach $443 million. Private cloud revenue moved in the opposite direction, slipping 6% to $235 million.

Adjusted operating profit rose a sharp 20% year over year, landing at $31 million. Gross margins, however, narrowed to 17.6% from 19.1% in the prior-year quarter. The company also reported an adjusted loss of six cents per share, slightly wider than the analyst consensus of a four-cent loss.

Background: Rackspace’s Struggle Before the AI Pivot

Rackspace has faced years of competitive pressure in the managed hosting and cloud services market. The company went public again in 2020 after a leveraged buyout by Apollo Global Management. It subsequently battled rising debt loads and slowing legacy infrastructure demand. The shift toward AI-driven managed services represents its most significant strategic repositioning in several years.

Also Read: AMD Reports Strong Data Center Growth as AI Chip Demand Accelerates

AMD Partnership Adds Strategic Momentum

A newly signed Memorandum of Understanding with Advanced Micro Devices (NASDAQ: AMD) is drawing considerable investor attention. The two companies intend to jointly develop managed enterprise AI infrastructure solutions. The collaboration positions Rackspace as an integration partner for AMD’s growing data center and AI hardware portfolio. Investors appear to view this alliance as evidence that Rackspace’s strategic shift carries real commercial backing.

Full-Year Guidance Holds Steady

Management kept its fiscal 2026 revenue guidance intact, targeting a range of $2.6 billion to $2.7 billion. That midpoint aligns closely with the Street’s $2.64 billion estimate. Consistent guidance after a strong quarter typically reassures investors that results were not a one-time event. RXT shares remain near the 52-week high of $6.00 set during Friday’s session.

Read Next: What AMD’s Data Center Push Means for Enterprise AI Spending