Shares of Rackspace Technology RXT climbed about 16% in trading on Tuesday after the cloud services provider announced a major infrastructure agreement with Advanced Micro Devices and announced a 15% cut in its global workforce.
The company said it has signed a definitive agreement with AMD for the phased deployment of up to 30 megawatts of dedicated compute capacity across Rackspace’s global data-center footprint.
The rollout is expected to begin in late 2026 and continue through 2028.
The partnership is designed to support enterprise AI workloads, particularly in highly regulated industries such as healthcare, where demand for AI-powered applications and large-scale inference capabilities continues to rise.
At full deployment, the dedicated AMD infrastructure is expected to provide substantial computing capacity for customers seeking governed AI environments.
“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,” said Gajen Kandiah, chief executive officer of Rackspace Technology.
AMD also highlighted the growing need for flexible AI infrastructure among enterprise customers.
“As enterprise AI evolves, customers need infrastructure that can deliver the right mix of accelerated and general-purpose compute for each workload,” said Dan McNamara, senior vice president and general manager of Compute and Enterprise AI at AMD.
AI transformation drives restructuring
Alongside the AMD announcement, Rackspace disclosed a “workforce realignment plan” that will eliminate approximately 15% of its global workforce.
The company said the restructuring is intended to support its strategic transformation into what it describes as an operator for governed enterprise AI.
According to a regulatory filing, the changes will primarily affect legacy service delivery functions, particularly within the company’s Public Cloud business, while resources will be redirected toward AI-focused operations.
“This realignment is predominantly driven by the Company’s strategic decision to deemphasize certain legacy service delivery functions … and geographic rationalizations in favor of redeploying resources toward its enterprise AI buildout,” Rackspace said.
Most affected employees were notified around June 10, with additional workforce reductions expected over the next six months, depending on local regulations and job functions.
Rackspace estimates one-time restructuring costs of between $14 million and $19 million, largely tied to severance payments, healthcare benefits, and other employee-related expenses.
However, management expects the plan to generate annualized run-rate savings of approximately $75 million to $85 million once fully implemented.
Investors embrace AI pivot
The announcements come amid a dramatic turnaround in investor sentiment toward Rackspace.
Shares have surged more than 500% so far in 2026 as investors increasingly focus on the company’s AI cloud ambitions.
Even after the rally, however, the stock remains well below levels reached following its return to public markets in 2020 under Apollo Global Management.
The latest partnership also follows AMD’s recent acquisition of memory optimization company MEXT, a move aimed at addressing rising memory costs associated with AI computing.
AMD shares have more than doubled this year as demand for AI processors continues to accelerate.
For Rackspace, the AMD agreement represents another step in repositioning the company away from traditional cloud management services and toward enterprise AI infrastructure.
Investors appeared encouraged by both the growth potential of the AMD partnership and the expected cost savings from the workforce overhaul, sending the stock sharply higher ahead of Tuesday’s opening bell.
The post Rackspace stock soars 16% on AMD deal, 15% workforce cut to fund AI transformation appeared first on Invezz
