RingCentral and Five9 Surge as AI Concerns Ebb with Strong Earnings
By John Nada·Feb 21, 2026·5 min read
RingCentral and Five9 stocks surged after positive earnings eased fears about AI disruption in the software sector. Both companies reported growth driven by AI adoption.
Shares of RingCentral and Five9 experienced significant gains after both companies reported earnings that alleviated fears surrounding the impact of artificial intelligence on their business models. RingCentral's stock surged 34%, while Five9 rallied approximately 12%, as both firms exceeded Wall Street's estimates and provided positive guidance for the future.
Investors had been anxious about the potential for new AI tools to disrupt the software-as-a-service industry, leading to a widespread sell-off across the sector. Concerns centered on advanced AI products from companies like Anthropic and OpenAI that could replace traditional software solutions, prompting a considerable decline in the iShares Expanded Tech-Software Sector ETF, which has dropped about 23% this year. Notably, this downturn was significantly driven by the performance of other tech companies, with Atlassian, Unity Software, and Rapid7 each losing over half their value. Meanwhile, industry giants such as Salesforce and Microsoft also faced declines of 30% and 18%, respectively, adding to the overall negative sentiment in the software market.
However, RingCentral reported that demand has actually increased due to accelerating AI adoption, with annual recurring revenue from AI customers doubling year-over-year, reaching nearly 10%. This growth is indicative of the firm's successful strategy to integrate AI into their customer service solutions, particularly through the incorporation of ChatGPT models into their voice AI product. This move illustrates how RingCentral is not merely reacting to the rise of AI but is actively leveraging these advancements to enhance its offerings and attract new customers.
Five9 also noted a substantial rise in enterprise AI bookings, which more than doubled compared to last year, leading to an uptick in its backlog. The company highlighted the strength of its AI portfolio, which reached an impressive $100 million in annual recurring revenue. Chairman Michael Burkland emphasized the importance of large language models (LLMs) in enhancing customer solutions, asserting that while AI continues to evolve, there remains an "absolute competitive moat" that protects their business model. He voiced a critical perspective on the notion that LLMs alone could suffice for running customer service organizations, suggesting that human oversight and traditional systems are still essential.
The contrast between the initial fears surrounding AI and the subsequent positive performance of RingCentral and Five9 showcases a broader trend in the software sector. As AI technologies become more integrated into business operations, organizations that adapt to these tools may find themselves at a distinct advantage. This adaptability not only reassures investors but also signals a potential shift in how software companies can utilize AI as a cornerstone for growth, rather than viewing it solely as a threat.
As the market continues to absorb the implications of AI advancements, the performances of RingCentral and Five9 may serve as a bellwether for other companies in the software-as-a-service sector. Their ability to pivot and incorporate AI into their core offerings could illuminate pathways for navigating future disruptions. Investors are likely to keep a close eye on how these companies continue to evolve in response to technological advancements, particularly as they relate to customer service solutions.
The recent earnings reports from these firms have led to a reversal in sentiment, with investors increasingly optimistic about the potential for AI to drive revenue growth rather than diminish it. This optimism is reflected in the stock price movements, as both companies experienced significant surges following their announcements. The ability to meet and exceed Wall Street expectations is a testament to their strategic positioning and the effectiveness of their AI integration strategies.
This trend of AI adoption is not isolated to just RingCentral and Five9. The entire software sector is beginning to recognize the potential of AI not just as a tool for efficiency but as a driver of innovation. Companies that harness the power of AI—through enhanced customer engagement, improved service delivery, and streamlined operations—are likely to emerge as leaders in the market. As AI tools become more sophisticated and accessible, the firms that can adapt quickly will likely thrive, while those that resist change may find themselves left behind in a rapidly evolving landscape.
As we analyze the broader implications of these earnings reports, one must consider the potential long-term effects on the software industry. The fear of AI replacing traditional business models is giving way to a recognition of its potential as a transformative force. This shift in perspective could lead to a more nuanced understanding of the role AI plays in the economy, particularly in how businesses integrate these technologies to enhance their offerings.
Furthermore, the performance of RingCentral and Five9 could set a precedent for how investor sentiment evolves in light of AI advancements. If these companies can continue to demonstrate strong financial results while effectively leveraging AI, it could lead to increased confidence in the software sector as a whole. Such confidence would be crucial for attracting new investments and fostering a competitive environment that encourages innovation.
The ability of RingCentral and Five9 to adapt and leverage AI technologies may set a precedent for how the software industry evolves amid technological advancements, potentially stabilizing investor sentiment in the long term. As other companies in the sector assess their strategies in light of these earnings, it will be interesting to see how many choose to follow suit in embracing AI as a key component of their business models.
In the coming months, it will be essential for stakeholders to monitor the ongoing developments in the AI landscape and how they impact the software sector. The narrative surrounding AI is shifting from one of fear and uncertainty to one of opportunity and growth. The experiences of RingCentral and Five9 could very well be the harbingers of a new era for the software industry, where AI is not just a disruptor but a valuable ally in driving business success.