Rackspace faces securities fraud class action over AI and revenue claims
Kessler Topaz Meltzer & Check says investors who bought Rackspace Technology securities between May 7 and July 8, 2026, may seek lead-plaintiff status by Sept. 28, 2026.
Kessler Topaz Meltzer & Check says investors who bought Rackspace Technology securities between May 7 and July 8, 2026, may seek lead-plaintiff status by Sept. 28, 2026.
What happened
Rackspace Technology, Inc. faces a proposed securities fraud class action filed in U.S. District Court for the Southern District of New York, according to a PR Newswire repost of a Kessler Topaz Meltzer & Check, LLP notice. The case is captioned Morgan-Reed v. Rackspace Technology, Inc., No. 1:26-cv-06491.
The notice says the proposed class covers investors who bought or acquired Rackspace securities from May 7, 2026, through July 8, 2026, inclusive. It says investors have until Sept. 28, 2026, to seek appointment as lead plaintiff.
Why it matters
The notice says the complaint alleges Rackspace made materially false or misleading statements, or left out material adverse facts, about its business, operations and prospects.
Those allegations center on the company’s enterprise AI efforts, Private Cloud and Public Cloud revenue, its infrastructure resale business and fiscal 2026 revenue, according to the notice.
Context and background
The notice says Rackspace disclosed second-quarter 2026 results and a strategic and financial update on July 9, 2026, including its transition to becoming the operator of the full enterprise AI stack. It says the company reduced its full-year 2026 revenue guidance by $150 million and cut its full-year 2026 Private Cloud revenue outlook by $25 million.
The notice also says Rackspace said lower near-term margins reflect upfront growth investment and restructuring ahead of AI revenue ramping. It says Rackspace stock fell $2.21, or 33.6%, to close at $4.37 on July 9, 2026.
What officials said
KTMC’s notice says investors who purchased or acquired Rackspace securities and lost money may contact the firm for information about legal rights. It lists attorney Jonathan Naji, Esq., as a contact.
The notice also says the complaint in the matter was not filed by KTMC.
What happens next
Investors seeking lead-plaintiff status must move by Sept. 28, 2026, the notice says. The case will proceed in the Southern District of New York unless the court changes the schedule or the parties reach another resolution.
Sources
Editorial note: This article was prepared with AI assistance and includes source attribution for reader review.
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