Software Stocks Rally Amid AI Concerns: RingCentral and Five9 Show Resilience

LivestreamMenuMake ItselectUSAINTLLivestreamSearch quotes, news & videosLivestreamWatchlistSIGN INCreate free accountMarketsBusinessInvestingTechPoliticsVideoWatchlistInvesting ClubPROLivestreamMenu Shares of RingCentral and Five9 surged on Friday after earnings from both software firms alleviated recent fears that artificial intelligence is eating away at their business models. RingCentral popped 34%, while Five9 rallied about 12% after topping Wall Street's estimates and issuing upbeat guidance. Both companies, which provide customer service solutions like voice integration, said accelerating AI adoption has boosted demand. New AI tools, capable of building apps and websites in a matter of minutes, have spooked investors in recent weeks, leading to a massive selloff across the software sector. The worry is that these products, emerging from the likes of Anthropic and OpenAI, will displace the software-as-a-service industry's longstanding business models as firms lean on quicker and more efficient AI tools. So far this year, the iShares Expanded Tech-Software Sector ETF tracking the sector has plunged about 23%, led to the downside by Atlassian, Unity Software and Rapid7, which have shed more than half their value. Software giants Salesforce and Microsoft have dropped 30% and 18%, respectively. RingCentral, which is up about 37% this year after a 17% slump in 2025, called AI a tailwind to its business, telling investors on Thursday that annual recurring revenue from customers using the tools doubled year over year to nearly 10%. The company also recently integrated ChatGPT models into its voice AI product. Elsewhere, Five9 told investors that its enterprise AI bookings more than doubled from a year ago, leading to an uptick in its backlog. Management also said the company's AI portfolio hit $100 million in annual recurring revenue. Chairman Michael Burkland told analysts during an earnings call on Thursday that Five9 leverages large language models, or LLMs, to enhance solutions for its customers, but maintains an "absolute competitive moat." "We're going to continue to have advancements by LLMs, but I've said this even two years ago, you cannot run a customer service organization on an LLM," he said. Five9 shares have declined nearly 4% this year, following a 51% sell-off in 2025. WATCH: Citi's Tyler Radke: We're getting close to the bottom of the software sell-off Got a confidential news tip? We want to hear from you. Sign up for free newsletters and get more CNBC delivered to your inbox Get this delivered to your inbox, and more info about our products and services. © 2026 Versant Media, LLC. All Rights Reserved. A Versant Media Company. Data is a real-time snapshot *Data is delayed at least 15 minutes.

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