Advanced Micro Devices (AMD) saw its data center business hit a record $5.8 billion in Q1 2026 revenue, up 57% year-over-year (YoY), as companies rushed to build out AI capacity. But demand is shifting beyond just raw computing power. Businesses now want AI systems that meet strict rules and standards, especially in sectors like finance and healthcare. That is where Rackspace Technology (RXT) comes in.
On June 16, 2026, both companies signed a definitive agreement to roll out 30 megawatts of AMD-powered AI compute across Rackspace Technology’s global data centers, starting in late 2026 through 2028. This deal builds directly on their earlier Memorandum of Understanding (MOU) announced May 7, 2026, and establishes Advanced Micro Devices as the core chip provider at the silicon layer of Rackspace’s governed AI stack (including Enterprise AI Cloud, Inference as a Service, and Bare-Metal AMD Instinct deployments).
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So with Rackspace leaning on this deal as part of its turnaround and AMD using it to deepen its AI reach, does this partnership actually make both stocks worth buying right now? Let’s find out.
Advanced Micro Devices
Advanced Micro Devices makes chips that power everything from PCs to data centers, but its real focus now is on high-performance computing. Its EPYC CPUs and Instinct GPUs are being used more in AI workloads, where it is going head-to-head with Nvidia (NVDA) and Intel (INTC).
AMD stock has moved hard on that story. It is up 26% in the past month, 320% over the past 52 weeks, and 148% year-to-date (YTD).
www.barchart.com That optimism shows up in the valuation, too. AMD trades at a forward P/E of 82.52x, well above the sector average of 24.38x.
In Q1 2026, revenue came in at $10.25 billion, up 37.8% YoY and ahead of estimates, while EPS reached $1.37. Margins also improved, with EBITDA at 26.8% and free cash flow margin climbing to 25%. The company also guided for $11.2 billion in next-quarter revenue, pointing to steady demand.
The company expects server CPU revenue to grow over 70% YoY in Q2 2026, while the broader server market could expand from about $26 billion in 2025 to $135 billion by 2030. Advanced Micro Devices already holds roughly a 41% share in this space.
Through this partnership, its Instinct GPUs and EPYC CPUs will power Rackspace Technology’s AI cloud, targeting industries that need both performance and compliance. Advanced Micro Devices gets its chips deeper into industries like finance and healthcare, where adoption has been slower due to strict requirements.
Analysts are still very bullish on AMD stock, with the 45 rating it as a consensus “Strong Buy.” But with the stock already trading about 11% above the $473.74 average target, a lot of that optimism may already be priced in.
www.barchart.com Rackspace Technology
Rackspace Technology provides cloud and IT services, helping companies run their systems across public and private cloud setups. Lately, it has been trying to shift toward AI and higher-value cloud services where it can offer more than just basic hosting.
The market reacted quickly. Rackspace Technology shares jumped intraday on June 16, reaching $7.82. RXT stock is now up 292% over three months. It is one of the more surprising AI stories this year, considering it traded below $1 earlier in 2026 before climbing more than 646% YTD as investors chased new AI exposure in cloud names.
www.barchart.com In Q1 2026, revenue came in at $678 million, up just 2%, with public cloud growing 7% while private cloud fell 6%. There are signs of improvement, with net income turning positive at $8 million from a $72 million loss a year ago and operating losses narrowing. Still, cash flow remains weak at just $5 million for the quarter, which shows the business is not fully stable yet.
The 30 MW deal turns earlier plans into a real commercial rollout, giving Rackspace Technology a stronger footing in AI infrastructure. It also helps the company target industries like finance and healthcare that need secure and compliant systems. Just as important, Rackspace gets access to Advanced Micro Devices’ latest chips without having to build its own tech, which makes it more competitive.
Even so, analysts are not fully convinced. The three tracked by Barchart rate RXT stock as a “Hold,” with an average price target of $4.33. With the stock trading about 66% above that, expectations may be running ahead of what the company has delivered so far.
www.barchart.com Conclusion
The AMD-Rackspace partnership looks like a strategic win, but not an equal one in the near term. AMD strengthens its enterprise AI reach with more durable, high-quality demand, while Rackspace gets a credible path to stay relevant in the AI infrastructure race. The difference is execution risk.
AMD is already delivering strong growth to justify its premium, while Rackspace still has to prove its turnaround can hold. From here, AMD shares look more likely to grind higher on fundamentals, while Rackspace may stay volatile as expectations cool and delivery becomes the real test.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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