Is RXT a good stock to buy? We came across a bullish thesis on Rackspace Technology, Inc. on r/smallstreetbets by lumbridge12. In this article, we will summarize the bulls’ thesis on RXT. Rackspace Technology, Inc.’s share was trading at $4.5100 as of June 8th. RXT’s forward P/E was 91.74 according to Yahoo Finance.
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Rackspace Technology, Inc. operates as a hybrid cloud and artificial intelligence solutions company in the United States and internationally. RXT is emerging as a potentially overlooked beneficiary of the growing enterprise AI infrastructure market following its partnership announcement with Palantir Technologies. The company, which once traded near $26 per share before collapsing to below $0.50, has recently attracted renewed investor attention after Palantir selected Rackspace to support deployment of its Artificial Intelligence Platform (AIP) on Rackspace’s infrastructure.
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The partnership is notable because Rackspace operates in a highly competitive cloud environment alongside hyperscalers such as Amazon Web Services, Microsoft Azure, and Google Cloud, yet still secured a strategic role due to its expertise in hybrid and private cloud infrastructure, AI governance, and enterprise consulting. Rackspace currently generates nearly $3 billion in annual revenue while trading at a relatively modest market capitalization compared to many AI-related companies that produce little or no revenue.
The company serves more than 20,000 customers globally across healthcare, government, and enterprise markets, positioning it well as businesses increasingly prioritize private and hybrid cloud solutions for data sovereignty and security. Management has also made progress operationally, significantly reducing operating losses over the past year while maintaining relationships with key technology partners including NVIDIA, AMD, AWS, Google Cloud, and Microsoft.
Additional AI initiatives, including collaboration with Uniphore for agentic AI infrastructure, further strengthen Rackspace’s positioning. With Apollo Global Management still holding a majority stake and a limited public float, investors believe the stock could experience substantial upside if the company successfully capitalizes on enterprise AI adoption and continues executing its turnaround strategy.
Previously, we covered a bullish thesis on Accenture plc by Sanjiv in December 2024, highlighting its leadership in cloud migration, managed services, and GenAI-driven enterprise transformation. Accenture plc’s stock has depreciated by approximately 51.02% since our coverage. lumbridge12 shares a similar view but focuses on Rackspace Technology, Inc.’s AI infrastructure turnaround opportunity driven by hybrid cloud capabilities and its partnership with Palantir Technologies.
Rackspace Technology, Inc. is not on our list of the 40 Most Popular Stocks Among Hedge Funds. As per our database, 8 hedge fund portfolios held RXT at the end of the first quarter which was 8 in the previous quarter. While we acknowledge the risk and potential of RXT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than RXT and that has 10,000% upside potential, check out our report about this cheapest AI stock.
Disclosure: None.
