Shares of Rackspace Hosting, Inc. RAX 0.8% surged more than 5.2 percent this week on rumors the company may be drawing buyout interest. CLSA analyst Louis Miscioscia is not convinced, however, and believes that a buyout wouldn’t make a lot of sense.

According to Miscioscia, the public cloud space is now a three-horse race between Amazon.com, Inc. AMZN 0.54%, Microsoft Corporation MSFT 0.07% and Alphabet Inc GOOGL 0.09%, and the data center architecture of each of these three vendors is not compatible with Rackspace’s architecture.

In addition, second-tier players like Hewlett Packard Enterprise Co HPE 0.85%, International Business Machines Corp. IBM 0.74% and VMware, Inc. VMW 2.28% are likely so far behind the big three names that they are unwilling to invest billions of dollars at this point playing catch-up.

“IBM is making a go of it with its 2013 acquisition of SoftLayer, but from our checks and even with billions of investments, doesn’t seem to be gaining enough traction,” Miscioscia explains.

He concludes…

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