Rackspace Technology Cuts Guidance, Pivots to AI with Palantir and AMD

Rackspace Technology (RXT) announced a reduction in its 2026 revenue guidance to a range of $2.45-2.55 billion, along with lower expected adjusted EBITDA. Concurrently, the company launched a $250 million at-the-market (ATM) equity program to fund its pivot toward artificial intelligence, leading to a 6.6% drop in its stock price.

Announcement Details

• Guidance Cut: Rackspace lowered its 2026 revenue guidance from previous levels to $2.45-2.55 billion, with reduced adjusted EBITDA expectations.
• Equity Program: Launched a $250 million ATM equity program to finance AI investments.
• Exit from Low-Margin Activities: The company will exit public cloud resale and legacy hosting.
• Palantir Partnership: Rackspace became Palantir's preferred operator for regulated and sovereign deployments.
• AMD Expansion: Committed to expanding AMD-powered AI capacity.

Context

This announcement comes as Rackspace seeks to reposition itself as an AI leader, amid declining traditional businesses. The partnerships with Palantir and AMD aim to bolster enterprise AI offerings.

What It Means for Investors

The strategic pivot carries significant execution risks, especially with lowered guidance and new share issuance. Investors should monitor the company's ability to generate AI-driven growth and offset legacy business declines.