Rackspace investors face Sept. 28 deadline in securities fraud case
Kessler Topaz Meltzer & Check says a securities fraud class action has been filed against Rackspace Technology over allegations tied to its AI strategy and revenue guidance.
Kessler Topaz Meltzer & Check, LLP said investors who bought or acquired Rackspace Technology Inc. securities between May 7, 2026, and July 8, 2026, may seek to lead a securities fraud class action against the company by Sept. 28, 2026.
The firm said the case, Morgan-Reed v. Rackspace Technology, Inc., No. 1:26-cv-06491, was filed in the U.S. District Court for the Southern District of New York. Rackspace trades on Nasdaq under the symbol RXT.
The notice says the complaint alleges Rackspace and related defendants made materially false or misleading statements, or left out material adverse facts, about the company’s business, operations and prospects. It says the complaint claims Rackspace’s enterprise AI efforts would require it to shift capacity and capital away from its Private Cloud segment, while Public Cloud revenue was declining as customers contracted directly with hyperscale cloud platforms.
The release also says the complaint alleges Rackspace would likely reduce a material portion of its Public Cloud infrastructure resale business and that fiscal year 2026 revenue would be significantly affected. Those allegations come from the lawsuit described in the notice and have not been tested in court.
The timing centers on Rackspace’s July 9, 2026, earnings and strategy update. Before the market opened that day, the company said it was moving toward becoming the operator of the full enterprise AI stack. The release says Rackspace disclosed that AI investments would require a significant re-prioritization of resources, cut full-year 2026 revenue guidance by $150 million, and lowered its full-year 2026 Private Cloud revenue outlook by $25 million.
Rackspace also said, in the words quoted in the notice, that “lower near-term margins reflect upfront growth investment and restructuring, ahead of AI revenue ramping.” The same release says the stock fell $2.21, or 33.6%, to close at $4.37 on July 9, 2026.
Kessler Topaz’s notice says there is no cost or obligation to speak with an attorney. It lists Jonathan Naji, Esq. as a contact for investors seeking information about the case. The firm also said the complaint was not filed by KTMC itself, but in a matter associated with the notice it distributed.
Investors who want the court to consider them for lead-plaintiff status must act by Sept. 28, 2026. The notice says investors who do not seek that role can still remain in the case and potentially share in any recovery if the lawsuit succeeds.
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Editorial note: This article was prepared with AI assistance and includes source attribution for reader review.
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