Rackspace Hit With Fraud Suit After AI Pivot Triggers 33.6% Stock Crash
New York – – September 10, 2026 -- Rackspace Technology, Inc. (NASDAQ:RXT) faces a securities fraud class action after its stock plunged 33.6% on July 9, 2026, when the company slashed its full-year revenue guidance by $150 million and cut its Private Cloud revenue outlook by $25 million.
Law firm Bleichmar Fonti & Auld LLP filed the suit, captioned Morgan-Reed v. Rackspace Technology, Inc., No. 26-cv-6491, in the U.S. District Court for the Southern District of New York. Investors have until September 28, 2026 to seek lead plaintiff status.
Stock collapsed 33.6% after AI capacity shift disclosure
Rackspace shares fell $2.21, from a July 8, 2026 close of $6.58 to $4.37 on July 9, 2026, after the company disclosed that its AI investments required a significant re-prioritization of resources and a transition away from certain revenue-generating segments.