Rackspace Technology (RXT) shares fell about 10% in early Friday trading after soaring roughly 68% in the prior session, as investors locked in profits following the sharp rally. The surge came after the company reported fourth-quarter results that were better than feared and offered a more encouraging outlook for its turnaround.
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Strong Results and an AI Partnership Lift Sentiment
Rackspace reported $683 million in Q4 revenue and generated $60 million in operating cash flow, while non-GAAP operating profit reached $41 million, above the high end of guidance. The company also ended the year with roughly $397 million in total liquidity, easing balance-sheet concerns and helping support the turnaround story.
The company gave 2026 guidance for $2.6 billion to $2.7 billion in revenue and $160 million to $170 million in operating profit, pointing to better profits as the turnaround continues.
Sentiment had already started improving earlier this month after Rackspace announced a partnership with Palantir Technologies (PLTR). Under the agreement, Rackspace will help enterprises deploy and operate Palantir’s Foundry and Artificial Intelligence Platform (AIP), linking the company more directly to growing enterprise AI spending.
Is Rackspace Technology Stock a Buy, Sell, or Hold?
Turning to Wall Street, the analysts’ consensus rating for Rackspace Technology is Hold, based on one Hold rating over the past three months. With that comes an average RXT stock price target of $1.30, representing potential 42.98% downside for the shares.
