Lay off 15% to make way for AI! Rackspace (RXT.US) signed a contract with AMD to deploy 30 megawatts of computing power in stages, causing the stock to surge over 25% in pre-market trading.

Notice that on Tuesday, AMD (AMD.US) signed an agreement with AI infrastructure solutions provider Rackspace Technology (RXT.US) to deploy the first phase of 30 megawatts (MW) of AMD AI computing resources. Before the stock market opened on Tuesday, Rackspace's stock price surged by approximately 27%, and as of writing, it was up by 21.39% at $7.16. This deployment will begin at the end of 2026 and continue until 2028, covering Rackspace's global data centers. The agreement is the implementation of a memorandum of understanding announced by the two companies last month. Both companies stated that after full deployment, this 30MW of AMD exclusive computing resources will provide significant service capacity to meet regulated enterprise workload demands, including healthcare providers who have shown early interest in accelerated computing for clinical AI and large-scale inference. This collaboration will combine AMD Instinct GPUs (including MI355X, MI350P, and future solutions) with AMD EPYC CPUs into a unified enterprise AI cloud architecture. Both parties noted that the agreement will expedite the delivery of four key functions announced with the memorandum of understanding: enterprise AI cloud, enterprise inference engine, inference as a service, and bare metal AMD Instinct, providing a complete, controlled technology stack from bare metal computing to fully managed inference. Dan McNamara, Senior Vice President and General Manager of AMD Computing and Enterprise AI, stated, "By combining industry-leading AMD AI computing solutions with Rackspace's managed cloud operations, we are helping regulated enterprises deploy high-performance AI infrastructure. It also provides the openness, scalability, and accountability needed to run AI at an enterprise scale." Both companies plan to allocate sales and marketing resources to identify and connect with enterprise customers. Rackspace Layoff Plan In another statement, Rackspace announced that it will undergo an employee restructuring, expecting a reduction of approximately 15% of its global workforce. The company stated that the majority of affected employees were notified around June 10, and the remaining employees' departure plans will occur over the next six months based on job roles and jurisdiction. Rackspace mentioned that the board's executive committee approved this employee restructuring plan on June 10. The company indicated that this adjustment is primarily due to strategic decisions, such as reducing certain traditional service delivery functions (mainly within the public cloud business) and optimizing regions to reallocate resources to its enterprise AI development. Rackspace anticipates that this employee reorganization will result in one-time costs of approximately $14-19 million, with the majority expected to occur within 2026. Upon full implementation, the company estimates annual operating cost savings of $75-85 million compared to current spending levels. Rackspace stated that a significant portion of these anticipated savings will be reinvested in its highest growth product and service areas, including cutting-edge deployments, AI solution delivery, and enterprise AI infrastructure development. Additionally, Rackspace mentioned that during the ongoing evaluation of opportunities to optimize operations, the company may take additional measures as part of advancing its strategic transformation process.