The law firm of Kirby McInerney LLP announces that a class action lawsuit has been filed on behalf of investors who acquired Rackspace Technology, Inc. (“Rackspace” or the “Company”) (NASDAQ: RXT) common stock between May 7, 2026 and July 8, 2026, inclusive (“the Class Period”).

If you suffered a loss on your Rackspace investments, you have until September 28, 2026 to request lead plaintiff appointment. Courts do not consider lead plaintiff applications submitted after this deadline. If you choose to take no action, you may remain an absent class member. For more information about the lawsuit:

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What Is This Lawsuit About? The lawsuit alleges that Rackspace made materially false and/or misleading statements and failed to disclose material adverse facts about the Company’s business, operations, and prospects as it failed to disclose to investors that (i) the Company’s enterprise AI efforts would require Rackspace to significantly re-prioritize its capacity and capital away from the profitable Private Cloud segment; (ii) Rackspace’s Public Cloud revenue was declining as customers contracted directly with hyperscale cloud platforms; (iii) as a result, Rackspace was likely to significantly reduce a material portion of its Public Cloud infrastructure resale business; and (iv) as a result, the Company’s fiscal year 2026 revenue would be significantly impacted.

On May 7, 2026, Rackspace announced a partnership with AMD to create an enterprise AI cloud The same day, the Company reaffirmed the fiscal 2026 guidance that had been provided in February and held an earnings call where management described Rackspace’s growth and readiness for its new AI pivot, as well as purported details of the mechanics of the AMD deal.

On June 16, 2026, the Company announcing a workforce realignment plan “intended to accelerate the Company’s strategic transformation as the operator for governed enterprise AI” whereby the Company said it expected to realize “$75 million to $85 million in annualized run-rate savings compared to current expense levels.” This plan included a 15% reduction in workforce.

On July 9, 2026, Rackspace published its second quarter 2026 financial results and “a strategic and financial update on its transition to becoming the operator of the full enterprise AI stack” and held an earnings call to discuss results. The Company revealed that its AI investments would require a significant re-prioritization of resources, reduced its full year 2026 revenue guidance by $150 million, and reduced its full year 2026 Private Cloud revenue outlook by $25 million, “given the low-margin nature of the exited revenues across both business units and investments in AI compute capacity.” Management further explained that the reduced guidance was in part due to the decision to “redeploy [] capacity and capital towards higher-yielding AI deployments.” Management also stated that “We are reducing our public cloud revenue estimate for 2026 by $125 million, driven by this decision to exit low-margin public cloud infrastructure resale revenue and a continuation of the trend of hyperscaler direct contracting.” Finally, the Company explained 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.

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The Lead Plaintiff Appointment Process. The federal securities laws permit any investor who acquired eligible securities during the class period to seek appointment as lead plaintiff in a class action lawsuit. Learn more about the lead plaintiff process and eligibility requirements here. Courts typically appoint the investor(s) with the largest financial loss in the case and the ability to represent the class rather than investors with simply the largest investment portfolio. Courts regularly appoint individual investors, whether acting alone or as a group, as lead plaintiffs. The rights of any investor who bought shares during the class period are generally already protected. However, lead plaintiffs have the power to influence case strategy and have a say in settlement decisions, as well as decisions concerning allocation of settlement funds among class members.

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What Should I Do? If you purchased or otherwise acquired Rackspace securities, have information, or would like to learn more about this investigation, please contact Lauren Molinaro of Kirby McInerney LLP by email at investigations@kmllp.com, or fill out the contact form below, to discuss your rights or interests with respect to these matters at no cost.

Kirby McInerney LLP is a New York-based plaintiffs’ law firm concentrating in securities, antitrust, whistleblower, and consumer litigation. The firm’s efforts on behalf of shareholders in securities litigation have resulted in recoveries totaling billions of dollars. Additional information about the firm can be found at Kirby McInerney LLP’s website.

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