Advanced Micro Devices, Inc.

🇺🇸NASDAQ Global Select
Back to all articles
Advanced Micro Devices, Inc. stock analysis AMD overview
Bullish +75

Rackspace soars as it partners with chipmaker AMD on artificial intelligence

📈 Rackspace Technology reported its first profitable quarter in two years with an $8 million profit compared to a $38 million loss last year.

🚀 Stock prices surged 55% on Thursday, reaching a four-year high of $4.62 before closing at $3.52.

🤝 The company announced a strategic partnership with chipmaker AMD to develop and manage artificial intelligence cloud networks.

🏥 The AI strategy targets regulated industries including healthcare, financial services, government, defense, energy, and telecommunications.

🛡️ Rackspace will act as a single operator for customers' AI infrastructure, handling setup, daily operations, data center space, and staffing.

📊 Revenue reached $678 million in the first quarter, slightly up from $665 million in the same period last year.

☁️ Public cloud revenue grew to $443 million while private cloud revenue decreased to $235 million due to prior year comparisons.

🔧 CEO Gajen Kandiah stated the market is shifting toward enterprises wanting accountability for where AI runs and who operates it.

🤖 The AMD partnership focuses on hardware provision, whereas a separate Palantir agreement adds software capability to Rackspace's offerings.

👥 Rackspace plans to train 250 staff members on Palantir's programs by the end of the year as part of its broader AI expansion.

🏢 The company operates more than 30 data centers globally to support the deployment of AMD-powered processors for customers.

🔒 Private cloud offerings provide dedicated hardware per customer, emphasizing security and customization over shared public cloud infrastructure.

📉 Private cloud revenue declined from $250 million last year, highlighting a shift toward higher-margin public cloud services.

💡 Potential applications include precise lending risk assessment for banks and faster medical insights for healthcare organizations.

🎯 Rackspace aims to lead the emerging market category of "governed enterprise AI infrastructure."

Bullish Signals
  • Rackspace Technology reported its first profitable quarter in two years, posting an $8 million profit compared to a $38 million loss the previous year.
  • Shares surged to a four-year high, trading as high as $4.62 before closing at $3.52, representing a 55% increase for the day.
  • Revenue increased to $678 million from $665 million in the same period last year, with public cloud revenue growing to $443 million from $416 million.
  • The company's strategy is delivering results as it transitions into a new profitable growth phase under CEO Gajen Kandiah since his appointment in September.
  • A new strategic partnership with chipmaker Advanced Micro Devices Inc. (AMD) will allow Rackspace to provide AMD-powered processors for customers' AI infrastructure.
  • The deal positions Rackspace as a 'single operator accountable for every layer' of AI systems, offering a simpler and safer model than self-managed solutions.
  • Rackspace operates more than 30 data centers globally, providing ample space to source hardware and support the new AMD-powered offerings.
  • The company is expanding its regulated enterprise AI infrastructure market category, targeting key sectors like healthcare, financial services, government, and defense.
Risk Factors
  • Private cloud revenue declined to $235 million in the first quarter, down from $250 million reported last year.
  • A significant portion of Rackspace's share price surge (trading as high as $4.62 before closing at $3.52) may be driven by short-term hype rather than sustainable fundamentals, as the stock remains well below recent highs.
  • The AMD partnership primarily focuses on hardware, whereas the company relies on software capabilities from partners like Palantir to offer full AI platforms to customers.
  • Palantir has faced criticism for data aggregation practices and work with immigration enforcement agencies, which could create reputational risks if linked closely to Rackspace's enterprise offerings.
Full Analysis
Rackspace Technology Inc., operating under the Nasdaq ticker RXT, reported its first profitable quarter in two years on Thursday, posting an $8 million profit compared to a $38 million loss a year ago, which sent shares to a four-year high of $4.62 before closing at $3.52, up 55% for the day. This turnaround coincided with an announcement that the San Antonio-based cloud computing company has partnered with chipmaker AMD to develop artificial intelligence cloud networks specifically for businesses and government agencies. Under the agreement, Rackspace will manage everything from data center setup to daily operations for customers using AMD processors, offering a simpler and safer model than having clients manage their own AI systems. The partnership aligns with Rackspace’s broader strategy to assist regulated industries such as healthcare, financial services, government, defense, energy, and telecommunications in incorporating AI into their networks while maintaining data sovereignty and compliance. CEO Gajen Kandiah stated that the market is moving toward regulated enterprises making deliberate choices about where AI runs and who is accountable for outcomes. The technology is intended to provide single-operator accountability for every layer of AI infrastructure, helping banks assess lending risks and detect fraud more precisely while enabling healthcare organizations to collaborate on cases and provide faster insights into patient care. Rackspace currently operates more than 30 data centers globally and aims to provide AMD-powered processors as part of its services. This hardware-focused partnership complements a previous deal with Palantir Technologies Inc., announced in February, which involved deploying two AI software programs across customer networks and training 250 staff members by the end of the year. In the first quarter, Rackspace’s revenue reached $678 million, an increase from $665 million the prior year, driven primarily by its public cloud segment which reported $443 million in revenue versus $416 million a year ago, while private cloud revenue decreased slightly to $235 million from $250 million. The AMD deal helps Rackspace lead what it calls the new market category of governed enterprise AI infrastructure, combining its extensive data center presence with advanced hardware capabilities to meet specific workload requirements for performance and compliance.