Rackspace Technology (RXT) is having a day. The cloud services company's stock soared more than 70% on Thursday after it announced a big AI partnership with Advanced Micro Devices (AMD) and reported quarterly revenue that came in ahead of what Wall Street was expecting.

Let's start with the numbers. For the first quarter, Rackspace reported an adjusted loss of six cents per share, which was a bit worse than the four-cent loss analysts had penciled in. But revenue came in at $678.1 million, up 2% from a year ago and above the $660.83 million consensus estimate. That's the kind of mixed bag that can still get investors excited if the story is right.

Breaking down the revenue, private cloud revenue dipped 6% to $235 million, while public cloud revenue grew 7% to $443 million. Adjusted operating profit rose 20% to $31 million. But gross profit fell 6.1% to $119.1 million, and margins shrank to 17.6% from 19.1% a year earlier. The company ended the quarter with $94 million in cash, down from $105.8 million.

Now for the real headline-grabber: Rackspace and AMD signed a Memorandum of Understanding to create what they're calling a new category of managed enterprise AI infrastructure. The idea is to combine AMD's Instinct GPUs and EPYC CPUs with Rackspace's cloud management expertise to build a fully managed environment tailored for regulated enterprises. Think banks, healthcare companies, government agencies — organizations that need AI but also need to keep things secure and accountable.

This is a smart move. The AI market is booming, but many enterprises are hesitant to jump in because they worry about data security, governance, and compliance. By offering a managed solution that addresses those concerns, Rackspace is positioning itself as a go-to partner for companies that want to use AI without building everything from scratch.

As for the outlook, Rackspace kept its fiscal 2026 guidance unchanged. The company still expects an adjusted loss of 15 to 20 cents per share, which is wider than the analyst estimate of a 9-cent loss. Revenue is expected to be between $2.6 billion and $2.7 billion, compared to the Street's $2.64 billion estimate. So the guidance is cautious, but the market seems to be focusing on the AI opportunity.

Technically, the stock is on fire. At the time of publication, shares were up 70.7% at $3.87, hitting a new 52-week high. The current price of $4.13 is 178% above the 20-day simple moving average of $1.54 and 169% above the 50-day SMA of $1.59. The MACD indicator is above its signal line, suggesting bullish momentum. Over the past 12 months, the stock has gained nearly 200%. But here's a note of caution: the 20-day SMA is still below the 50-day SMA, which could signal a bearish crossover down the road. So while the party is fun today, keep an eye on the technicals.

Rackspace Technology is an end-to-end hybrid multi-cloud services company. It designs, builds, and operates customers' cloud environments across all technology platforms, regardless of the tech stack or deployment model. Its solutions include application services, data, colocation, cloud, managed hosting, professional services, and security and compliance.

The AMD partnership is a big deal because it gives Rackspace a differentiated offering in the crowded cloud market. By embedding AMD's cutting-edge hardware into a managed service, Rackspace can offer enterprise customers a secure path to AI adoption. That could be a powerful growth driver if executed well.

For now, investors are betting that the AI tailwind will more than offset the near-term earnings challenges. Whether that bet pays off will depend on how quickly Rackspace can turn this partnership into real revenue.