Robbins LLP Is Investigating Allegations that Rackspace misled investors regarding the Company’s enterprise AI efforts and failed to disclose that it would require Rackspace to significantly re-prioritize its capacity and capital away from the profitable Private Cloud segment and that Rackspace’s Public Cloud revenue was declining as customers contracted directly with hyperscale cloud platforms.

Robbins LLP informs investors that a securities class action has been filed on behalf of persons and entities that purchased or otherwise acquired Rackspace Technology, Inc. (NASDAQ: RXT) securities between May 7, 2026 and July 8, 2026, inclusive (the "Class Period"). Rackspace is a hybrid cloud and AI solutions company that owns and operates physical infrastructure to host cloud services and artificial intelligence.

Investors who suffered significant losses during the Class Period may be eligible to participate in the lawsuit and should contact Robbins LLP for information about becoming lead plaintiff.

Why Was Rackspace Sued?

The complaint alleges that Rackspace made materially false or misleading statements regarding its business, operations, and financial condition during the Class Period.

Specifically, the lawsuit alleges that the Company failed to disclose:

• the Company’s enterprise AI efforts would require Rackspace to significantly re-prioritize its capacity and capital away from the profitable Private Cloud segment;
• that Rackspace’s Public Cloud revenue was declining as customers contracted directly with hyperscale cloud platforms;
• that, as a result, Rackspace was likely to significantly reduce a material portion of its Public Cloud infrastructure resale business;
• as a result, the Company’s fiscal year 2026 revenue would be significantly impacted; and
• that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lack a reasonable basis.

Why Did Rackspace's Stock Drop?

Plaintiff alleges that on July 9, 2026, Rackspace disclosed second quarter 2026 financial results, including "a strategic and financial update on its transition to becoming the operator of the full enterprise AI stack."

The Company revealed that:

•  its AI investments would require a significant re-prioritization of resources and, as a result, reduced its full year 2026 revenue guidance by $150 million;.
• it cut its full year 2026 Private Cloud revenue outlook by $25 million; and
• that “[l]ower near-term margins reflect upfront growth investment and restructuring, ahead of AI revenue ramping.”

On this news, Rackspace’s stock price fell $2.21, or 33.6%, to close at $4.37 per share on July 9, 2026.

Who May Be Eligible to Participate in the Rackspace Class Action?

The lawsuit seeks to represent investors who purchased or otherwise acquired Rackspace securities between May 7, 2026 and July 8, 2026. Investors who suffered losses during that period may have legal rights under the federal securities laws.

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