RingCentral and Five9 are staging a comeback. The two cloud communications companies saw their stocks rally following earnings reports that quieted investor panic about AI tools destroying their business models. After weeks of brutal selling pressure across the software sector, the results suggest reports of SaaS's death may be greatly exaggerated. It's a critical test case for whether legacy software can coexist with the AI revolution.
The software sector just got a badly needed shot of confidence. RingCentral and Five9, two cloud communications platforms that have been caught in a vicious AI-driven sell-off, posted earnings that sent their stocks surging and challenged the narrative that generative AI will demolish traditional SaaS business models.
For weeks, software stocks have been in freefall. Investors spooked by the rapid advancement of AI agents and coding assistants have been dumping shares of enterprise software companies, betting that tools like OpenAI's advanced models and Google's Gemini will make expensive software subscriptions obsolete. The logic goes that if AI can handle customer service, write code, and automate workflows, why pay for specialized software?
But the earnings reports from RingCentral and Five9 tell a more nuanced story. Rather than being displaced by AI, these companies are embedding AI capabilities into their platforms, potentially making them more valuable rather than redundant. RingCentral has been integrating AI-powered features into its unified communications platform, while Five9 has focused on AI-driven contact center automation that complements rather than replaces its core offering.
The market response was immediate. After touching multi-year lows in recent trading sessions, both stocks rebounded as investors reassessed the AI threat. The rally suggests that Wall Street may have overreacted to the disruption narrative, at least for certain categories of enterprise software.
