Rackspace Technology, Inc. (NASDAQ:RXT) shares are extending a massive rally this Monday.

The momentum follows Friday session where the stock surged 54% hitting a new 52-week high. Investors are reacting to a strategic pivot toward artificial intelligence and stronger-than-expected quarterly sales.

Rackspace Revenue Topples Street Estimates

Rackspace reported first-quarter sales of $678.100 million, representing a 2% year-over-year increase. This figure topped the Street estimate of $660.83 million. Growth was fueled by public cloud revenue, which climbed 7% to $443 million. Conversely, private cloud revenue fell 6% to $235 million.

Strategic AMD AI Partnership

A major catalyst involves a new Memorandum of Understanding with Advanced Micro Devices, Inc. (NASDAQ:AMD). The companies aim to create managed enterprise AI infrastructure, according to the announcement. This collaboration integrates AMD’s Instinct GPUs and EPYC CPUs into Rackspace’s offerings.

Profitability and Margin Shifts

Adjusted operating profit jumped 20% to $31 million. However, the company reported an adjusted loss of six cents per share. This missed the analyst consensus of a four-cent loss. Gross margins also contracted to 17.6% from 19.1% in the prior year.

Rackspace 2026 Fiscal Outlook

Management reaffirmed its fiscal 2026 sales guidance of $2.6 billion to $2.7 billion. This outlook aligns with the Street estimate of $2.64 billion.

RXT Price Action: Rackspace Technology shares were up 3.46% at $5.68 during premarket trading on Monday. The stock is approaching its 52-week high of $6.00, according to Benzinga Pro data.

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