Rackspace Stock Plunges on Guidance Cut and AI Pivot Concerns
Rackspace Technology (RXT) shares crashed 33.59% on July 9, 2026, after the company issued a severe guidance cut and released weak preliminary Q2 2026 results. Revenue guidance was slashed to $2.45-$2.55 billion from $2.6-$2.7 billion, attributed to a deliberate exit from low-margin public cloud resale operations and retreat from low-margin colocation services. The company also launched a $250 million at-the-market equity offering, signaling balance sheet caution. Despite a landmark partnership with Palantir Technologies for deploying AI platforms in regulated environments, investor focus remained on the structural headwind of hyperscaler disintermediation. Management insists the strategic pivot toward governed enterprise AI infrastructure remains on track, with profitability expected from 2027. RXT shares have a beta of 8.36 and a 52-week range of $0.39 to $8.60.
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