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Rackspace surges after 30 MW AI compute deal with AMD; cuts 15% jobs
Advanced Micro Devices (AMD) and AI infrastructure solutions provider Rackspace Technology (RXT) signed an agreement for the phased deployment of an initial 30 MW of AMD AI compute.
Shares of Rackspace surged about 27%, while AMD climbed about 1% premarket on Tuesday.
The deployments will occur across Rackspace's global data centers starting in late 2026 through 2028.
The agreement operationalizes a memorandum of understanding, or MoU, announced last month between the companies.
The companies said that at full deployment, 30 MW of dedicated AMD compute will represent meaningful capacity to serve regulated enterprise workloads, including healthcare providers who have shown early interest in accelerated compute for clinical AI and inference at scale.
The collaboration incorporates both AMD Instinct Graphics Processing Units, or GPUs (including MI355X, MI350P, and future successor solutions), and AMD EPYC CPUs inside an integrated enterprise AI cloud architecture.
The companies noted that the agreement will accelerate delivery of the four integrated capabilities announced with the MOU: Enterprise AI Cloud, Enterprise Inference Engine, Inference as a Service, and Bare Metal AMD Instinct, offering a complete, governed stack from bare metal compute through fully operated inference.
"By bringing together leadership AMD AI compute solutions and Rackspace’s governed cloud operating model, we are helping regulated enterprises deploy high-performance AI infrastructure with the openness, scalability and accountability needed to run AI at enterprise scale," said Dan McNamara, senior vice president and general manager, Compute and Enterprise AI, AMD.
Both companies expect to dedicate sales and marketing resources to identify and engage enterprise customers.
Rackspace workforce reduction
Separately, Rackspace said that it will carry out a workforce realignment that is expected to result in the termination of about 15% of its global workforce.
The company said a majority of the impacted employees were notified on or around June 10, with additional exits planned to occur over the following six months, depending on role and jurisdiction.
Rackspace noted that on June 10 the executive committee of the board approved the workforce realignment plan. The company said the realignment is predominantly driven by its strategic decision to deemphasize certain legacy service delivery functions (primarily within its Public Cloud business unit) and geographic rationalizations in favor of redeploying resources toward its enterprise AI buildout.
Rackspace estimates that it will incur one-time expenses of about $14M to $19M in connection with the workforce reorganization, substantially all of which is expected to be incurred in 2026.
Upon full implementation, the company expects to realize about $75M to $85M in annualized run-rate savings compared to current expense levels.
The company said it intends to reinvest a significant portion of these expected savings in its highest-growth product and service areas, including forward-deployed engineering, AI solutions delivery, and enterprise AI infrastructure buildout.
Rackspace noted that it may also implement additional measures in connection with its ongoing strategic transformation as it continues to evaluate opportunities to optimize its operations.