RXT Ran 380% in Two Weeks

At a Glance

• RXT closed at $3.52 on May 7, up 55% on the day, after Q1 earnings and an AMD AI cloud agreement landed simultaneously
• From a late-April low near $1.40, the stock hit an intraday high of $6.72 by May 12 — less than two weeks
• Q1 revenue: $678M, up 2% YoY. Public cloud grew 7%. Private cloud fell 6%
• GAAP net income was $8.3M, but $55.8M of that came from a one-time debt gain — not operations
• The AMD agreement is non-binding. No revenue, no timeline, and explicitly excluded from 2026 guidance
• Long-term debt: $3.05B. Cash on hand: $93.6M. Debt matures mid-2028
• Analyst consensus price target: $2.17. Stock near $5.00
• Next hard date: Q2 earnings August 6

Here is what actually happened with Rackspace Technology (NASDAQ: RXT) over the past two weeks, stripped of the hype.

The company reported Q1 earnings on May 7 and simultaneously announced a memorandum of understanding with AMD to co-develop an Enterprise AI Cloud for regulated industries. That combination triggered a 55% single-day move. The stock closed at $3.52. Volume exceeded 60 million shares, more than triple the 20-day average. Shorts that had been positioned against what looked like a structurally impaired, debt-heavy cloud business got caught badly. Buyers pressed. The stock kept moving over the following days and tagged an intraday high of $6.72 on May 12 before pulling back under $6. From a late-April low of $1.40, that is a multi-bagger in under two weeks. The 52-week low is $0.393.

That is the move. Now look at what is underneath it.

Q1 revenue came in at $678M, up 2% year-over-year, clearing the Street estimate of $674.95M. Public cloud was the growth engine at $443M, up 7%. Private cloud slipped 6% to $235M. Management said the decline was a healthcare onboarding timing issue, not a demand problem. Non-GAAP operating profit rose 20% to $31M. Adjusted EBITDA was $71.2M. GAAP net income flipped to $8.3M positive, reversing a $71.5M loss in Q1 2025. But $55.8M of that net income came from a one-time gain on debt extinguishment. Without it, the earnings picture is considerably less dramatic. Non-GAAP EPS came in at -$0.06, missing the -$0.03 consensus. Gross margins contracted year-over-year. Pretax margins are still roughly -21%.

The AMD deal is the part most people are trading. Rackspace and AMD signed a multiyear MOU to build a governed cloud stack — AMD Instinct GPUs and EPYC CPUs, fully managed, with Rackspace as the single accountable operator. The target market is regulated enterprise: healthcare systems, financial institutions, and government agencies that cannot simply move AI workloads onto a public hyperscaler and walk away. CEO Gajen Kandiah’s argument is that someone has to own the outcome when AI fails in a regulated environment. That is a real and largely unsolved problem.

The part people are skipping: CFO Mark Marino said on the earnings call that AMD-related revenue is not factored into 2026 guidance. Supply chain and delivery timing were cited. Management’s own framing puts meaningful AMD contribution in 2027 at the earliest. The stock ran hard off a deal that, by management’s own admission, does not move 2026 numbers.

One thing worth noting separately: the Palantir partnership generated a real commercial result in Q1. Rackspace closed its first joint deal in 41 days, deploying AI workflows on Palantir Foundry for a U.S. solar tracking manufacturer and cutting their quoting cycle by 94%. That deal expanded into EMEA. It is one data point. But operational specificity like that is more credible than a press release.

Full-year 2026 guidance was left entirely unchanged after all of it: revenue $2.6 to $2.7B, adjusted EBITDA $305 to $315M, non-GAAP operating profit $160 to $170M. Not one number was revised upward. That restraint cuts both ways. It could mean disciplined conservatism. It could mean the AMD deal is not yet converting into anything that changes the model.

The balance sheet is the thing that keeps this from being a clean story. As of March 31, Rackspace held $93.6M in cash against $3.05B in long-term debt and roughly $130M in current obligations. Total liquidity including the revolving credit facility was $295M. Working capital is approximately negative $250M. Debt matures mid-2028. BMO Capital raised its price target from $2.00 to $5.00 and kept an Outperform, specifically citing the AI partnerships. RBC held at $2.50. The consensus across three covering analysts sits at $2.17. The stock is near $5.00.

Cheat Sheet

• Bull case ($7 to $8): AMD MOU converts to a signed contract, private cloud stabilizes in Q2 as the healthcare backlog clears, Palantir bookings grow, guidance gets revised upward in August
• Base case ($3.50 to $5.50): No contract news before August, volume normalizes, stock waits on Q2 earnings — AMD is an option on 2027 execution, not a 2026 fundamental driver
• Bear case (back toward $2): MOU stalls, private cloud deteriorates beyond the timing story, $3B+ in debt becomes the conversation again as 2028 maturities get closer
• Support ($3.50 to $3.80): Where the initial surge ignited — buyers returned here on the first pullback
• Resistance ($5.00 to $5.50): Profit-taking has been consistent in this range
• Breakout line ($6.72): Intraday high from May 12 — clearing this on volume would change the short-term picture
• Volume signal: Declining volume on a dip to $3.50 is constructive. A high-volume close below it is not
• Next hard date: Q2 earnings August 6. Any AMD contract announcement before then would be the real catalyst

Position sizing matters more than direction here. RXT has posted 20%-plus single-session moves multiple times in the past two weeks. Being right and being sized correctly are two different things in a stock like this.

The AMD deal either becomes a contract or it doesn’t. Guidance either gets revised in August or it doesn’t. Until one of those changes, you are sitting with an interesting business trading well above where the analyst community thinks it belongs.

August 6 will be clarifying.

For informational and educational purposes only. Not investment advice. Trading involves risk, including loss of principal.