By Christopher Kuo
Shares of Rackspace Technology were sharply higher after the company signed a memorandum of understanding with Advanced Micro Devices for a multiyear partnership to create a new artificial intelligence cloud service.
Shares of the enterprise AI infrastructure and solutions provider recently jumped 93% to $4.38. The stock earlier reached a three-year high of $4.47 on Thursday.
The company said the partnership will create a new type of enterprise AI that will use AMD's processors and will be managed by Rackspace. Traditionally, enterprise AI services require companies to rent GPU capacity by the hour and then carry the operational burden of ensuring security and accountability, the company said. Under this new collaboration, Rackspace will fulfill those duties for companies.
"Governing AI infrastructure in regulated environments with defined accountability is not something you bolt on after the fact," said Rackspace Chief Executive Gajen Kandiah. "It must be built in from the start."
Both Rackspace and AMD are benefiting from the surge in demand for AI agents, the bots that execute tasks autonomously for users.
AMD saw its revenue jump 38% to $10.25 billion in its latest quarter, fueled by rapid growth in its data center segment.
For its latest quarter, Rackspace posted a profit of $8.3 million, or 3 cents a share, compared with a loss of $71.5 million, or 31 cents a share, a year earlier. Its revenue ticked up 1.9% to $678.1 million.
Write to Christopher Kuo at chris.kuo@wsj.com
(END) Dow Jones Newswires
05-07-26 1109ET
