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 14% 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.