Morgan Stanley Updates Five9 (FIVN) Outlook as AI Fears Ease for SaaS Sector

Five9 Inc. (NASDAQ:FIVN) is one of the best small cap tech stocks to invest in now. On January 15, Morgan Stanley lowered its price target for Five9 to $26 from $30 while keeping an Equal Weight rating. The firm noted that SaaS stocks lagged behind the broader software and technology sectors in 2025.

However, growing evidence suggests that AI-related risks may be less severe than previously anticipated, offering a more positive outlook for the group in 2026. Despite this, the firm remains selectively opportunistic due to a persistent lack of widespread upward revisions in corporate spending.

On January 12, Barclays analyst Raimo Lenschow lowered the firm’s price target on Five9 to $25 from $29 with an Overweight rating on the shares. This adjustment was made as part of a broader 2026 outlook for the software sector, where Barclays remains generally positive despite the lowered targets. The firm cited stable macroeconomic conditions and IT spending, combined with low stock valuations and the fact that the sector is currently out of favor, as reasons for a favorable setup in the coming year.

Morgan Stanley Updates Five9 (FIVN) Outlook as AI Fears Ease for SaaS Sector

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Five9 Inc. (NASDAQ:FIVN), together with its subsidiaries, provides intelligent cloud software for contact centers in the US and internationally. It offers a CX platform that delivers a suite of applications, which enables the breadth of customer service, sales, and marketing functions.

While we acknowledge the potential of FIVN to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than FIVN and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.