Rackspace Technology, executives named in securities fraud lawsuit over AI strategy

SAN ANTONIO – A securities fraud class-action lawsuit has been filed against San Antonio-based Rackspace Technology Inc. and senior executives, which were unnamed. The complaint alleges the company misled investors about its artificial intelligence strategy and the impact those investments would have on the company’s financial performance.

Bleichmar Fonti & Auld LLP announced Aug. 4 that the lawsuit was filed in the U.S. District Court for the Southern District of New York. The case, Morgan-Reed v. Rackspace Technology Inc., No. 26-cv-6491, alleges violations of Sections 10(b) and 20(a) of the Securities Exchange Act of 1934.

According to the complaint, Rackspace told investors that its AI initiatives, including a memorandum of understanding with Advanced Micro Devices Inc. to expand AI infrastructure capabilities bolstered its growth strategy and its full-year private cloud revenue outlook.

The lawsuit alleges those statements were misleading.

Read more of this story at the San Antonio Business Journal website.

Editor’s note: This story was published through a partnership between KSAT and the San Antonio Business Journal.

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