Assessing Five9 (FIVN) Valuation After New Google Cloud AI Alliance Announcement

Simply Wall St.01-22

AdvertisementWhy Five9’s new Google Cloud alliance is drawing fresh investor attention Five9 (FIVN) has attracted fresh interest after announcing an expanded partnership with Google Cloud, centered on...

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See our latest analysis for Five9. The expanded Google Cloud alliance has arrived during a weak patch for the stock, with a 30 day share price return showing a 14.79% decline and a 1 year total shareholder return reflecting a 56.20% loss. This points to pressure that this news may be helping to reframe rather than reverse outright. If this AI partnership has caught your eye, it could be a good moment to see what else is happening across high growth tech and AI stocks and compare how other names are reacting to similar themes. With the stock down sharply over 1 and 3 years, yet trading at a steep discount to analyst targets and some intrinsic estimates, you have to ask: is pessimism overdone here, or is the market already looking through to future growth? Price-to-Earnings of 43.5x: Is it justified? Five9 last closed at US$17.40 and is trading on a P/E of 43.5x, while our DCF estimate points to a fair value of US$61.78 and analysts as a group have set a target of US$33.43 that is well above the current price. The P/E ratio compares the share price to earnings per share and is often used for software names where earnings are a key focus. A higher P/E typically means investors are paying more today for each dollar of current earnings, which can reflect confidence in future profit growth or simply an expensive entry point. In Five9’s case, the 43.5x P/E sits above the estimated fair P/E of 33.8x and also above the US Software industry average of 30.1x. This suggests the market is assigning a richer earnings multiple than both the sector and the level our fair ratio points to as a potential anchor. Peer comparisons tell a similar story, with the 43.5x P/E standing well above the peer average of 24.6x. This highlights how much optimism is already embedded in the current price. Explore the SWS fair ratio for Five9 Result: Price-to-Earnings of 43.5x (OVERVALUED) However, you still have to weigh risks such as Five9’s weak multi year shareholder returns and the possibility that large enterprise customers delay or scale back CX spending. Find out about the key risks to this Five9 narrative. Another View: Cash Flows Tell a Different Story While the 43.5x P/E points to an expensive stock, our DCF model presents a different perspective, with an estimated future cash flow value of US$61.78 compared to the current US$17.40 price. That gap raises an important question: is the market being overly cautious, or are the cash flow assumptions too generous? Look into how the SWS DCF model arrives at its fair value. FIVN Discounted Cash Flow as at Jan 2026Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Five9 for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 876 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.  Build Your Own Five9 Narrative If you see the numbers differently or prefer to test your own assumptions, you can build a custom view in minutes with Do it your way. A great starting point for your Five9 research is our analysis highlighting 3 key rewards and 2 important warning signs that could impact your investment decision. Looking for more investment ideas? If Five9 has you thinking differently about AI and valuation, do not stop here. Widen your scope with a few focused stock ideas tailored to specific themes.  Spot potential recovery stories by checking out these 3536 penny stocks with strong financials that already have balance sheets and financials doing some heavy lifting. Zero in on future focused themes by reviewing these 23 AI penny stocks that are tying their growth plans directly to real world AI adoption. Prioritise price discipline by scanning these 876 undervalued stocks based on cash flows that currently screen as trading below estimated cash flow based value.   This article by Simply Wall St is general in nature. We provide commentary based on historical data\n    and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your\n    financial situation. We aim to bring you long-term focused analysis driven by fundamental data.\n    Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material.\n    Simply Wall St has no position in any stocks mentioned.New: AI Stock Screener & AlertsOur new AI Stock Screener scans the market every day to uncover opportunities.• Dividend Powerhouses (3%+ Yield)• Undervalued Small Caps with Insider Buying• High growth Tech and AI CompaniesOr build your own from over 50 metrics.Explore Now for FreeHave feedback on this article? Concerned about the content? Get in touch with us directly. 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