Key Takeaways:
Rackspace Technology will operate Palantir's AI platforms in sovereign and regulated environments under a partnership that has already scaled to 400 certified engineers.
Rackspace Technology will operate Palantir Technologies' Foundry and Artificial Intelligence Platform in sovereign and regulated environments, targeting enterprises that cannot move data across borders or cede control to third-party cloud providers.
"While most regulated enterprises have an AI strategy, they often lack the operating model to put AI into production safely and at scale," Gajen Kandiah, chief executive officer of Rackspace Technology, said.
The partnership has scaled to approximately 400 Palantir certifications across sales, engineering, delivery and operations, up from 30 earlier this year. The first joint deployment — at a US-based solar tracking manufacturer — delivered a 94 percent reduction in quote cycle time using AI-enabled workflows on Palantir Foundry.
Rackspace is committing to deploy Foundry and AIP across more than 70 percent of its own back-office operations under its OneOS program, running its business on the same governed stack it operates for customers. The company plans to reach 30 megawatts of cumulative Enterprise AI capacity by the end of 2028, targeting $450 million to $600 million in annual revenue at full deployment with adjusted EBITDA margins above 50 percent.
A Framework for Regulated AI
The operating model combines Palantir's AI layer with Rackspace's governed private cloud, sovereign cloud and on-premise infrastructure, along with certified forward-deployed engineers and managed operations. It targets healthcare systems protecting patient records, financial institutions running on regulated data, energy operators with air-gapped infrastructure and sovereign organizations that cannot move data across borders.
Under the definitive agreement announced Thursday, Rackspace serves as a preferred operator for on-premise, private cloud and sovereign Palantir deployments across critical infrastructure in both the public and private sectors. The two companies will work together to acquire and serve customers in healthcare, financial services, energy, private equity and the mid-market.
"Sovereign AI requires more than access to a model," Alex Karp, co-founder and chief executive officer of Palantir Technologies, said. "It requires an operating layer that lets enterprises govern data, enforce permissions, route models, audit actions and deploy capability where the mission lives."
The Financial Calculus
Rackspace lowered its full-year 2026 revenue outlook by $150 million to a range of $2.45 billion to $2.55 billion, and adjusted EBITDA by $20 million to $285 million to $295 million, as it exits low-margin colocation and basic hosting revenue to reserve capacity for Enterprise AI. The company reported preliminary second-quarter revenue of $641 million to $649 million.
The strategic bet is that Enterprise AI capacity will add a new growth vector on top of its established Private Cloud base. Rackspace expects to average $15 million to $20 million of annual revenue per megawatt deployed as GPU and customer mix evolves, with 50 percent-plus adjusted EBITDA margins at full deployment. The company has partnered with AMD, Rubrik, Uniphore and VMware by Broadcom during 2026 to assemble the governed enterprise AI stack.
Rackspace shares trade on the Nasdaq under the ticker RXT. Palantir trades under PLTR.
This article is for informational purposes only and does not constitute investment advice.
