Rackspace Signs AMD Chip Deal to Power Data Centers, Cuts 15% of Workforce

Rackspace Technology announced an agreement with Advanced Micro Devices (NASDAQ: AMD) to supply chips for its data center infrastructure, according to reporting from Yahoo Finance. To fund the project, Rackspace said it is cutting 15% of its workforce across the board. Rackspace shares jumped 25% in premarket trading on the news.

Deal Terms

• Rackspace signed an agreement with AMD to source chips specifically designated to power its data center operations.
• The company announced a 15% workforce reduction company-wide to finance the chip procurement and buildout.
• AMD is positioned as the hardware provider in the arrangement, supplying chips directly into Rackspace's infrastructure stack.
• Financial terms of the AMD-Rackspace chip agreement were not disclosed.

Why It Matters

The Rackspace deal adds a named enterprise customer to AMD's data center client roster at a moment when the server CPU chip market is drawing intensified investment, according to Yahoo Finance. A separate report noted that AMD, alongside peers, is ramping AI server CPU efforts as agentic AI applications drive projected market expansion to exceed $170 billion by 2030.

For AMD, the arrangement represents incremental chip volume from a cloud infrastructure operator willing to restructure its own cost base to secure the hardware. The fact that Rackspace is absorbing a significant workforce reduction to fund the purchase underscores the urgency operators are placing on AI-capable data center chips.

Wall Street View

Analyst sentiment on AMD remains firmly constructive. As of June 1, 2026, the consensus stood at 14 Strong Buy ratings, 32 Buy ratings, and 11 Hold ratings, with zero Sell or Strong Sell recommendations. That compares to 15 Strong Buy, 30 Buy, and 13 Hold ratings as of May 1, reflecting a modest shift toward Buy from Hold over the past month.

Investor Takeaway

The Rackspace agreement confirms continued enterprise demand for AMD data center chips, with a counterparty willing to absorb material operational costs, including a 15% headcount reduction, to secure supply. AMD shares traded at $537.87 on Tuesday, June 16, 2026, down 1.72% on the session, a move that preceded the premarket reaction in Rackspace shares. With the server CPU market projected to exceed $170 billion by 2030 and Wall Street carrying 46 Buy-or-better ratings against 11 Hold ratings, the Street's conviction on AMD's infrastructure positioning remains intact.