Rackspace Technology is facing a securities class action in the U.S. District Court for the Southern District of New York after a July 9, 2026 share-price plunge that followed a cut to its 2026 outlook. Bleichmar Fonti & Auld LLP said the complaint, filed under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, alleges the company and certain senior executives misled investors about its AI efforts and their effect on financial performance. The suit centers on statements made when Rackspace announced a memorandum of understanding with Advanced Micro Devices, Inc. and reaffirmed full-year revenue guidance, while allegedly failing to disclose that AI investments would require a major reallocation of capacity away from revenue-generating segments. Rackspace later said those investments required significant resource reprioritization and a transition away from some revenue-generating businesses, cutting full-year 2026 revenue guidance by $150 million and its full-year Private Cloud revenue outlook by $25 million. Its stock fell $2.21, or 33.6%, to $4.37 from $6.58 the previous day. Investors have until September 28, 2026 to ask the court to appoint them lead plaintiff in the case, captioned Morgan-Reed v. Rackspace Technology, Inc., No. 26-cv-6491.