Rackspace (RXT) Stock Surges 68% Following Q4 Earnings Beat and AI Partnership

Rackspace Technology's stock skyrocketed 68% on Thursday, with an additional 11% surge in premarket trading Friday, after reporting better-than-expected Q4 earnings. The company posted revenue of $683 million, surpassing the $674.91 million consensus, while EPS of -$0.010 beat estimates by $0.03. Operating cash Flow reached $60 million, with $397 million in total liquidity.

Investor sentiment was further buoyed by Rackspace's partnership with Palantir to deploy enterprise AI tools, signaling strategic positioning in the tech sector. Despite a miss on FY2026 EPS guidance, the revenue outlook of $2.6B–$2.7B and operating profit projections of $160M–$170M suggest long-term growth potential.

The dramatic price movement underscores market confidence in Rackspace's turnaround narrative, particularly its pivot toward cloud and AI-driven solutions. Private cloud revenue declines (-10% YoY) were overshadowed by the broader bullish reaction to operational improvements and forward-looking partnerships.