Shares of Rackspace Technology (RXT +54.19%) more than doubled on Thursday morning, peaking at a 103.5% gain near 10:50 a.m. ET. Goosed by a mixed earnings report with modest guidance, the cloud computing company's stock was up by 81.5% as of this writing, half an hour later.
Wait -- I just called the report imperfect. Shouldn't Rackspace's stock be crashing today?
NASDAQ: RXT
Key Data Points
The numbers didn't justify a victory lap
The Q1 2026 earnings report really wasn't terribly inspiring. Revenues rose 2% year-over-year to $678 million, slightly ahead of Wall Street's $675 million consensus target. On the bottom line, adjusted net losses held firm at $0.06 per share. Your average analyst was hoping for a smaller loss of around $0.03 per share.
And the company isn't exactly on the verge of a massive growth spurt. Management said that market trends are working out "in the direction we anticipated," and full-year guidance targets were unchanged across the board.
But that's not the whole story. Rackspace baked a fresh business opportunity into the earnings announcement, with potentially game-changing consequences.
"I am pleased to announce a Memorandum of Understanding with AMD to establish governed enterprise AI infrastructure as a new market category," said Rackspace CEO Gajen Kandiah. "It is a category Rackspace is built to lead."
Image source: Getty Images.
Enter AMD, stage left
Advanced Micro Devices (AMD 3.05%) is a head-turner on Wall Street nowadays. The chip designer moved the entire market with Tuesday evening's stellar earnings report, and it's a big deal to sign a new partnership with AMD right now.
Instead of renting out AMD Instinct and EPYC processor time by the hour, the company is offering purpose-built systems for regulated industries. That's a big deal for customers willing to pay a premium for extreme security and high performance.
The unchanged guidance suggests that the new AMD stacks won't generate revenues for Rackspace until 2027. Today's big jump is an early bet on long-term growth plans. The market may be getting ahead of itself today, but Rackspace is still a pretty affordable stock at 0.4 times trailing sales.
