Rackspace Technology and Palantir Technologies have entered into a partnership that will see Palantir’s Foundry and Artificial Intelligence Platform (AIP) hosted and operated in Rackspace’s private cloud and UK Sovereign data centers, providing customers with a governed operating model that includes security, compliance, and operational controls from edge to core to cloud.
The deal positions Rackspace as a managed‑services provider for Palantir’s AI platform, a move that is expected to generate higher‑margin revenue for the cloud‑services company. Rackspace’s recent financial performance has been challenging – Q1 2025 revenue fell 4% to $665 million with a $72 million net loss, and 2024 revenue of $2.74 billion was down 7.44% with a $858 million loss. In contrast, Palantir has posted strong growth, with Q4 2025 revenue up 70% YoY to $1.41 billion and FY 2025 revenue of $4.48 billion, up 56% YoY.
To support the partnership, Rackspace plans to expand its Palantir‑trained engineering team from 30 to more than 250 within 12 months, underscoring a significant investment in specialized talent that will enable rapid deployment of AI solutions for regulated customers.
The announcement triggered a strong market reaction, with Rackspace’s stock surging over 100% and reaching a 143.37% increase, reflecting investor confidence in the company’s pivot to AI‑driven services and its ability to capture contracts in regulated industries that demand private‑cloud hosting and strict data sovereignty.
Gajen Kandiah, CEO of Rackspace, said, “Organizations need AI that works in production, not just in demos. Palantir’s platform, combined with Rackspace’s governed cloud operations and our shared forward‑deployed engineering approach, enables customers to accelerate time to value and drive competitive business impact with governance and security. This is especially important in regulated industries.” Sameer Kirtane, Head of US Commercial at Palantir, added, “Organizations that adopt our AI Operating Systems fundamentally change their unit economics. In the context of migrating complex data environments, Palantir AIP is taking completion timelines from years to days. Rackspace will help our customers accelerate their pace of adoption and as a result, lead their respective industries.”
The partnership gives Rackspace a foothold in the high‑growth AI market, allowing it to offset declining legacy revenue streams and leverage Palantir’s platform to accelerate AI adoption in regulated sectors. By combining Palantir’s data‑centric AI capabilities with Rackspace’s private‑cloud expertise, the alliance is positioned to deliver higher‑margin, governed AI services that can drive new contracts and strengthen Rackspace’s competitive position against hyperscale providers and other systems integrators.
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