Shares of a little-known cloud-computing company that has been striking big deals with tech giants have been on a tear this year. And a new deal with Advanced Micro Devices is furthering that notable rally.

On Tuesday, Rackspace Technology and AMD signed a deal that will see Rackspace deploy 30 megawatts of AMD artificial-intelligence computing hardware. Shares of Rackspace Technology rose 5% on Tuesday, well off their intraday highs, bringing their year-to-date gains to 540%, the strongest performance in the Russell 2000 index of small-cap companies.

Rackspace’s 2026 stock performance also ranks fifth in the more size-inclusive Nasdaq Computer index, according to Dow Jones Market Data. The stock has outperformed Micron Technology, Arm Holdings and Marvell Technology, helping to showcase the strength of small-cap technology plays this year.

The computing hardware at the center of the new AMD deal will be used toward deployments across Rackspace’s global data centers beginning in late 2026 and going through 2028. AMD and Rackspace signed a memorandum of understanding in May that established AMD as the main hardware provider for Rackspace’s AI cloud.

BMO analyst Keith Bachman wrote in a May note that the company is pursuing a strategy centered on partnerships with key artificial-intelligence vendors, namely Palantir and AMD, in order to “strengthen long-term positioning for regulated AI workloads.”

“While still in early innings, we view the strategic direction positively,” he wrote last month, raising his price target to $5 from $2. Rackspace shares have already blown past that new target, changing hands near $7 in Tuesday morning action.

In February, Rackspace reached a deal to become a delivery partner for Palantir, focused on cloud hosting, data migration and AI transformation projects.

“Enterprises in regulated industries need AI infrastructure that is governed from the ground up, with one operator accountable for business outcomes, not a collection of vendors each owning a piece,” Gajen Kandiah, CEO of Rackspace Technology, said in Tuesday’s press release.

He said that the collaboration with AMD “combines the right compute with the right operating model.”

“As enterprise AI evolves, customers need infrastructure that can deliver the right mix of accelerated and general-purpose compute for each workload,” said Dan McNamara, senior vice president and general manager of compute and enterprise AI at AMD.