Shares of RingCentral and Five9 surged following their earnings reports, calming fears of AI disruption in their business models. RingCentral jumped 34% and Five9 rose 12%, both beating estimates and citing increased demand due to AI adoption. New AI tools have led to a software sector selloff, with iShares Expanded Tech-Software Sector ETF dropping 23%.

Investors are concerned that emerging AI products from companies like Anthropic and OpenAI will disrupt traditional software-as-a-service models. The iShares Expanded Tech-Software Sector ETF has plummeted 23% this year, with Atlassian, Unity Software, and Rapid7 losing over half their value. Giants like Salesforce and Microsoft have also seen declines of 30% and 18%, respectively.

RingCentral, up 37% this year, sees AI as a business booster, with annual recurring revenue from AI customers doubling to nearly 10%. Five9 reported a doubling of enterprise AI bookings leading to a $100 million AI portfolio, leveraging large language models for customer solutions while maintaining a competitive edge. Five9 shares have dropped 4% this year after a 51% decline in 2025.

Read more at CNBC: RingCentral (RING) and Five9 (FIVN) rally as AI fears settle