There's a classic scene in The Matrix where Neo dodges bullets for the first time. Everyone in the theater had their jaw on the floor. Well — RingCentral and Five9 just pulled off exactly that in the market.

While the entire software sector has been getting hammered since early 2026, these two customer service companies dropped Q4 results that made Wall Street choke on its own fear. RingCentral jumped 34% in a single day. Five9, 12%. In a sector where stocks have been melting down by over 50%.

Let's get to the good stuff.

The bloodbath in software

In case you haven't been paying attention, the software-as-a-service (SaaS) sector has turned into a war zone. The iShares Expanded Tech-Software ETF has already plunged about 23% on the year. Atlassian, Unity Software, and Rapid7 have lost more than half their value. Even the giants are getting beaten up: Salesforce is down 30%, Microsoft 18%.

The reason? Fear. Pure fear.

New AI tools from Anthropic and OpenAI are building apps and websites in a matter of minutes. The market looked at that and thought: "Why would I pay a monthly software subscription if an AI does the job for a fraction of the cost?" And then came the across-the-board selloff.

It's the same old story — the market panics first and asks questions later.

The answer nobody expected

RingCentral and Five9 showed up with the numbers in hand and said: "Hold the hell on. AI isn't our enemy. It's our fuel."

The facts:

  • RingCentral reported that annual recurring revenue from customers using AI tools doubled year over year, reaching nearly 10% of the base. The company integrated ChatGPT models into its voice AI product. The stock is already up 37% on the year — after dropping 17% in 2025.

  • Five9 said enterprise AI bookings more than doubled year over year, and the AI portfolio hit $100 million in annual recurring revenue. Chairman Michael Burkland was surgical on the earnings call: "You can't run a customer service operation on top of an LLM."

Read that sentence again.

The competitive moat the market ignored

Burkland hit on a point that 90% of LinkedIn analysts don't understand: LLMs are tools, not complete businesses.

It's the same logic Buffett uses when he talks about moats — competitive advantages. You can have the best language model in the world, but it doesn't know how Company X's customer service operation works with all its quirks, integrations, compliance requirements, ticket history, and customized workflows.

It's like saying that because ChatGPT writes code, Salesforce is going to die tomorrow. The business model might change — in fact, it will change — but the transition isn't a flip of a switch. It's a process. And whoever is already embedding AI into their own platform (like RingCentral and Five9 are doing) comes out ahead, not behind.

Nassim Taleb would call this antifragility — benefiting from chaos instead of being destroyed by it.

What actually matters here

Two lessons the market is giving us for free:

First: not all software is an AI victim. The "AI will kill SaaS" narrative is lazy. Some companies will die, sure. But the ones embracing the technology and turning it into a product are growing faster. Five9 with $100 million in AI ARR isn't a death sentence — it's a sign of adaptation.

Second: when panic is widespread and indiscriminate, opportunities show up. The entire sector dropped 23%, dragging down companies that are actually accelerating growth. That's the market being dumb in the short term, as usual.

Tyler Radke from Citi said we're near the bottom of the software selloff. Maybe. Maybe not. Nobody has a crystal ball — and anyone who says they do is selling you a course.

The question that remains

Are you looking at this massacre in the software sector and separating the wheat from the chaff? Or are you doing what the herd does — selling everything because "AI is going to destroy it all"?

Because when the dust settles, whoever bought the right companies during the panic is going to look like a genius. And whoever sold everything in desperation is going to watch the recovery from the sidelines, trying to figure out where they went wrong.

AI didn't come to kill everybody. It came to separate those who adapt from those who turn to dust.

Pick your side.