RingCentral’s Stock Struggles Amidst Competition and AI Advances

RingCentral’s (RNG) stock has tumbled 27.6% year-to-date, significantly underperforming the Zacks Computer & Technology sector, which has declined 11.8%. In contrast, the Internet – Software and Services sector has seen a rise of 4.5% within the same time frame.

RNG’s performance lags behind competitors like Microsoft (MSFT), Zoom Communication (ZM), and Cisco Systems (CSCO), all of which are advancing in AI-driven Unified Communications as a Service (UCaaS) technology. For example, Microsoft has upgraded its Teams platform with an AI Assistant, while Zoom and Cisco have launched ZOOM AI Companion and Cisco WEBEX AI, respectively.

In contrast, shares of Microsoft and Zoom fell 9.3%, whereas Cisco saw a 4.4% increase, further highlighting RNG’s struggles. Key factors influencing this underperformance include macroeconomic uncertainties, cautious enterprise spending, stiff competition, and currency fluctuations.

On a positive note, RNG continues to benefit from strong AI-driven product adoption and an expanding enterprise customer base, bolstered by offerings like RingCX and RingSense.

Understanding RingCentral’s Market Position

RingCentral, Inc. price-consensus-chart | RingCentral, Inc. Quote

Given RNG’s expanding product lineup, an important question arises: Is now the right moment to invest in RNG shares?

Exploring RNG’s AI-Enhanced Future

RingCentral has been proactive in integrating AI-enhanced features across its platforms, which has been a significant growth driver.

Recently, in the fourth quarter of 2024, RingCentral introduced the AI Receptionist, an AI-powered phone system designed to handle customer inquiries seamlessly. This innovation provides businesses with a cost-effective solution for call automation, streamlining communication without the burdensome expense of traditional intelligent virtual agents.

Demand for RNG’s Unified Communications as a Service and contact center software solutions remains strong, positioning the company favorably in a competitive market. Its growth is further supported by strategic partnerships with companies such as AT&T, Cox Communications, BT, and Vodafone.

In March 2025, RNG announced a collaboration with Cox Business to enhance AI-driven communications solutions, integrating Cox’s connectivity with RingCentral’s cloud offerings for improved business communications and customer experiences.

Positive Q1 Guidance from RNG

RingCentral’s expansive AI product offerings and growing partnerships signal promising growth potential.

For the first quarter of 2025, RingCentral estimates revenues between $607 million and $612 million, reflecting a year-over-year increase of approximately 4-5%.

The Zacks Consensus Estimate for first-quarter 2025 revenues stands at $610.74 million, indicating a 4.54% increase from the same period last year. Moreover, the consensus earnings estimate is 96 cents per share, unchanged over the past 30 days, which represents a projected year-over-year growth of 10.34%.

Evaluating RNG as a Sound Investment

Despite ongoing macroeconomic challenges and stiff competition, RNG’s solid AI product adoption, expanding enterprise relationships, and optimistic first-quarter forecast present a compelling case for potential investors.

Currently, RNG holds a Zacks Rank #1 (Strong Buy) alongside a Growth Score of A, highlighting its favorable investment potential according to the Zacks proprietary methodology.

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This article originally published on Zacks Investment Research (zacks.com).

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The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.