RXT Shareholder Alert: Rackspace Technology, Inc. Securities Class Action Lawsuit - Investors Should Contact Levi & Korsinsky

Important Notice Regarding Alleged Private Cloud Capacity Reprioritization Misrepresentations: Rackspace investors lost $2.21 per share after the Company allegedly failed to disclose that its enterprise AI buildout would redirect capacity and capital away from the Company’s profitable private cloud segment

NEW YORK--(BUSINESS WIRE)--Levi & Korsinsky, LLP notifies investors in Rackspace Technology, Inc. (NASDAQ: RXT) that a class action lawsuit has been filed on behalf of shareholders who purchased securities between May 7, 2026 and July 8, 2026. Find out if you could qualify to recover your losses. You may also contact Joseph E. Levi, Esq. at [e-mail] or [phone].

RXT shares declined $2.21 per share, or 33.6%, on July 9, 2026, closing at $4.37 on unusually heavy volume. The Company cut full-year 2026 revenue guidance by $150 million and its Adjusted EBITDA outlook by $20 million. Applications to serve as lead plaintiff must be filed by September 28, 2026.

The Alleged Private Cloud Capacity Reprioritization

Private Cloud carried a 24.7% operating margin in the first quarter of 2026, compared with 4.7% for Public Cloud. According to the lawsuit, Rackspace did not disclose that its enterprise AI buildout would require significant reprioritization of capacity and capital away from that profitable segment. On July 9, 2026, the Company reported that it was exiting colocation and basic hosting revenues to reserve capacity for Enterprise AI, reducing the Private Cloud outlook by $25 million.

How the Alleged Omissions Affected Reported Guidance

The complaint alleges that management reaffirmed full-year 2026 guidance in its entirety while the reprioritization was allegedly already underway. Prior guidance called for total revenue of $2,600 million to $2,700 million; revised guidance called for $2,450 million to $2,550 million, implying a year-over-year revenue decline of (9)% to (5)%.

Key Capacity Reprioritization Allegations for Shareholders

• Private Cloud revenue guidance was reduced from $1,025 to $1,075 million down to $1,000 to $1,050 million, attributed to exiting colocation and basic hosting to reserve AI capacity.
• The lawsuit contends investors were not told the AI strategy required diverting capital from the higher-margin segment.
• A workforce realignment plan announced in June 2026 affected approximately 15% of the global workforce, with one-time expenses of $14 million to $19 million.
• The realignment was projected to generate $75 million to $85 million in annualized run-rate savings, a significant portion earmarked for AI reinvestment.
• The complaint alleges positive statements about the Company's business and prospects lacked a reasonable basis.

"This case presents important questions about capacity and capital allocation disclosure obligations in the enterprise cloud and AI infrastructure sector. The complaint alleges that shareholders were not told the Company's AI buildout would require reprioritizing resources away from its highest-margin segment." -- Joseph E. Levi, Esq.

Submit your information here or call [phone].

WHY LEVI & KORSINSKY: Over the past 20 years, Levi & Korsinsky LLP has established itself as a nationally-recognized securities litigation firm that has secured hundreds of millions of dollars for aggrieved shareholders and built a track record of winning high-stakes cases. The firm has extensive expertise representing investors in complex securities litigation and a team of over 70 employees to serve our clients. For seven years in a row, Levi & Korsinsky has ranked in ISS Securities Class Action Services' Top 50 Report as one of the top securities litigation firms in the United States.

Frequently Asked Questions About the RXT Lawsuit

Q: What is the RXT class action lawsuit about? A: A securities class action has been filed against Rackspace Technology, Inc. (NASDAQ: RXT) alleging materially false and misleading statements between May 7, 2026 and July 8, 2026. Shares fell approximately 33.6% after the Company disclosed that AI investments required significant reprioritization of resources, resulting in a $150 million cut to full-year 2026 revenue guidance. Investors who purchased shares during the Class Period and suffered losses may be eligible to seek compensation.

Q: Who is eligible to join the RXT investor lawsuit? A: Investors who purchased RXT stock or securities between May 7, 2026 and July 8, 2026 and suffered financial losses may be eligible. Eligibility is based on purchase date and documented losses -- not on whether you still hold the shares.

Q: How much did RXT stock drop? A: Shares fell approximately 33.6%, a decline of $2.21 per share, after the Company disclosed the reprioritization of resources toward enterprise AI and the $150 million revenue guidance reduction. Investors who purchased shares during the Class Period at artificially inflated prices and suffered losses may be eligible to seek compensation.

Q: What do RXT investors need to do right now? A: Gather brokerage records including purchase dates, share quantities, and prices paid. Contact Levi & Korsinsky for a free, no-obligation evaluation at [e-mail] or [phone]. No immediate action is required to remain eligible as an absent class member.

Q: What is a lead plaintiff and why does it matter? A: A lead plaintiff is the investor appointed by the court to represent the entire class. Lead plaintiffs are typically investors with the largest documented losses. Being appointed does not increase individual recovery but gives direct oversight of how the case is run.

Q: What if I already sold my RXT shares -- can I still recover losses? A: Yes. Eligibility is based on when you purchased, not whether you still hold the shares. Investors who bought during the Class Period and sold at a loss may still be eligible to participate.

Q: What does it cost me to participate? A: There is no upfront cost to contact the firm. Securities class actions are generally handled on a pure contingency basis. No upfront fees, no retainer, and no out-of-pocket costs. Any attorneys' fees and expenses awarded to class counsel are subject to court approval.

Q: Do I need to go to court or give testimony? A: No. The overwhelming majority of class members never appear in court or give depositions. If there is a settlement or recovery, eligible class members generally submit a claim form to seek their portion.

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