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.
Complaint alleges Rackspace concealed AI-related capacity strain
The lawsuit claims Rackspace misled investors about its AI initiatives and their financial impact. During the period covered by the complaint, Rackspace signed a memorandum of understanding with Advanced Micro Devices, Inc. to build out AI infrastructure, telling investors the same day that the AMD partnership gave the company confidence in its full-year Private Cloud growth profile and reaffirming full-year revenue guidance.
The complaint alleges that in truth, Rackspace's AI efforts would force the company to pull capacity away from revenue-generating segments, a risk not disclosed at the time of the AMD announcement or the reaffirmed guidance.
Claims filed under Sections 10(b) and 20(a) of the Exchange Act
The action asserts securities fraud claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 on behalf of Rackspace investors. Representation is being offered on a contingency basis, with no upfront cost to shareholders.