PLTR
RXT
The bad news showed up first
Rackspace Technology just reminded investors that “strategic shift” is often corporate code for “brace for some messy quarters.” The cloud services company cut its full-year 2026 revenue outlook to $2.45 billion-$2.55 billion from $2.60 billion-$2.70 billion, and trimmed adjusted EBITDA guidance to $285 million-$295 million.
The market reaction was instant and unsentimental: the stock dropped more than 29%. That’s the financial equivalent of the room going quiet when the waiter says, “Actually, we’re out of that too.”
Why the company is doing this
Rackspace said the weaker outlook reflects a planned exit from low-margin businesses, including:
- public cloud resale
- certain colocation services
- basic hosting services
In other words, it’s trying to stop sweating the small stuff and spend more time chasing enterprise AI work, where the margins look juicier and the pitch deck sounds sexier.
The company also blamed supply timing and geopolitical issues for delaying some near-term deployments. Translation: the future is still under construction.
The AI story is still alive
This wasn’t just a doom-and-gloom call. Rackspace also tried to remind investors it has a plan, and that plan wears an AI badge.
It said:
- Enterprise AI capacity should hit 15 megawatts by the end of 2027
- That should grow to 30 megawatts by the end of 2028
- At full buildout, the business could bring in $450 million-$600 million in annual revenue
- Margins there could top 50%
That’s the kind of math that makes growth investors lean forward. The only problem? It’s a 2027-and-beyond story, while the stock is living in 2026.
Palantir gets a cameo — and a real role
Palantir also popped up here as more than just a name-drop. Rackspace said PLTR has named it a preferred partner for regulated and sovereign markets, and the two signed a definitive operating framework to deploy Palantir Foundry and AIP.
Rackspace says it has:
- trained about 400 Palantir-certified professionals
- completed its first joint customer deployment
So yes, the partnership is real. But on this tape, the partnership is basically the opening band while the guidance cut is the headliner.
Big picture: Rackspace is asking investors to look past the ugly near-term reset and buy into an AI-powered future. The market, at least today, looked at the reset and said, “No thanks, we’ll pass on the encore.”