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Five9 (FIVN): Evercore ISI Downgraded the Stock Despite AI Revenue Growth Rate of 91%

Farooq Sun, November 8, 2026 at 3:28 PM EST 4 min read **

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We just published a list of the 10 High-Profile Stocks Just Dumped by Top Analysts** and Five9 (NASDAQ:FIVN) ranked 8th on this list.

Wall Street had one of its roughest sessions of the year this week. The Nasdaq Composite fell 5.52% on November 5, its deepest one-day drop in 19 months, Reuters_ reported that day. The index closed more than 10% below its October 6 record, which confirmed a technical correction.

The S&P 500 slid 4.36% and the Dow Jones Industrial Average lost 3.44%, wiping about $3 trillion off the value of S&P 500 companies.

The Philadelphia SE Semiconductor index plunged more than 12%, and trading volume reached 26.9 billion shares, well above the 20-session average of 17.7 billion. Chipmakers and other AI-linked stocks took the brunt of the damage.

_ 12 Best Stocks to Buy and Hold For the Next 2 Years Photo by osamu nakazawa on Unsplash

Fears of AI Regulation Hit Chip Stocks Hardest

The trigger was politics. Democrats won control of Congress in Tuesday's elections, including in states where opposition to new data centers has grown. Investors worried that tougher rules could slow the buildout of AI infrastructure, according to the Reuters_ report.

Melissa Brown, global head of investment decision research at SimCorp, said any slowdown would raise concerns because AI growth has leaned on rapid construction of supporting infrastructure. Jed Ellerbroek, a portfolio manager at Argent Capital Management, said, "This feels like the capitulation phase for the data center capex beneficiary stocks," though he thinks the size of the moves is outsized.

The drop followed a strong run. The S&P 500 had posted its biggest one-day gain in three months the day before, and it is still up 7.4% for the year. We recently rounded up ten stocks you are selling and insiders are buying.

A Hot Jobs Report Revives Rate-Hike Bets

Friday's jobs report did little to calm nerves. Employers added 165,000 jobs in October, more than twice what economists expected, and the unemployment rate edged down to 4.1%, Reuters reported on November 6.

Traders raised their bets on a Federal Reserve rate hike in response. Markets priced about a 78% chance of a quarter-point increase at the central bank's December 8-9 meeting, up from about 67% on Thursday, and they now expect a final hike in April rather than June. For a look at the other side of the analyst picture, see our ranking of affordable stocks Wall Street analysts like.

Cleveland Fed President Beth Hammack and Richmond Fed chief Thomas Barkin had already hinted at possible future rate hikes, Reuters reported on November 5. Fed Chairman Kevin Warsh said last month that policymakers would watch the accumulation of data to decide whether more tightening is needed. Fitch Ratings analyst Olu Sonola said "the economy remains on firm footing" despite recent AI-related concerns, while Raymond James analysts wrote that they expect the Fed to raise rates by 25 basis points in December.

** Story Continues Five9 has a market cap of $2.12 billion and an average upside potential of 26% based on analysts' average price target, and had 35 hedge fund holders in Q2 2026.

Evercore ISI cut Five9 to In Line from Outperform on November 6 and kept its price target at $24. The firm said a clear turning point in growth is not yet visible and that near-term positive catalysts are missing.

The quarter had real strength. Revenue rose 13% to $323.3 million in the third quarter, and subscription revenue grew 16%. AI revenue was roughly $45 million, up 91% from a year earlier, and management raised its full-year AI growth outlook to at least 75% from at least 60%.

The profit outlook was the weak spot. Fourth-quarter non-GAAP earnings per share guidance of $0.88 to $0.92 came in below estimates, and full-year guidance of $3.17 to $3.21 implies a lower midpoint than the $3.26 cited in prior quarters. GAAP gross margin slipped to 53.4% from 55.0% a year earlier, and the company reaffirmed rather than raised its EBITDA margin and free-cash-flow targets.

Five9 also has a pending acquisition of Level AI, which it expects to close in the fourth quarter. Its guidance excludes that deal, and management said it "bought it for a steal."

While we acknowledge the risk and potential of FIVN as an investment, we believe certain AI infrastructure stocks offer far stronger long-term potential at a much more attractive entry point. If you are looking for an AI stock more promising than FIVN that operates as a critical AI tollbooth and stands as the most important company in the world, check out our report about this must-own AI stock**.

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