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Buy 3 Mid-Cap AI Internet Software Q3 Winners Set to Gain More in Q4
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Key Takeaways
Fastly is benefiting from AI-driven traffic growth, especially across Security, Compute and Network Services.
Five9 is expanding AI adoption through virtual agents, automation and partnerships to expand its market.
Workiva's earnings estimates are rising, while broker targets imply up to 24.7% upside from $71.88.
U.S. stock markets ended the last quarter predominantly in positive territory despite a volatile September. This was primarily driven by a solid performance of the technology sector. Most importantly, several Internet software developers have flourished notwithstanding the fear that artificial intelligence (AI) will cannibalize the traditional enterprise software space. Heightened geopolitical risks and tariff uncertainties were the other headwinds.
Here, we recommend three such companies with a favorable Zacks Rank. These stocks provided more than 30% returns in third-quarter 2026. Their current favorable Zacks Rank indicates more room for growth in the fourth quarter.
The chart below shows the price performance of our three picks in the third quarter.
Image Source: Zacks Investment Research
Fastly Inc.
Zacks Rank #2 Fastly provides infrastructure software offering cloud computing, image optimization, security, edge-computing technology and streaming solutions expanding into areas such as application security and AI-driven workloads. The company’s Fastly AI Accelerator is a semantic caching solution that allows developers to optimize their LLM generative AI applications.
AI Traffic Creates New Monetization Paths
FSLY is aligning its platform with machine traffic that requires real-time decisions on access, security and monetization. Management said AI-generated traffic is growing roughly 6.5 times faster than human traffic, with related demand appearing most clearly in Security and Compute and also in Network Services.
FSLY’s Edge Cloud Platform offers more efficient performance as developers need only a single line of code instead of repeated calls to the AI provider to update their application to a new API endpoint.
Strong Estimate Revisions
Fastly has an expected revenue and earnings growth rate of 18.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 65.6% over the last 60 days.
FSLY has an expected revenue and earnings growth rate of 14.4% and 24.8%, respectively, for the next year. The Zacks Consensus Estimate for next-year’s earnings has improved 6.5% over the last 30 days.
Long-Term View
FSLY views AI-driven demand as a tailwind across the business. Fastly is expanding capacity while retaining a more measured infrastructure model than peers building separate networks or GPU-heavy platforms.
AI tool usage is contributing to traffic growth among some of the company’s fastest-growing customers, with the impact most pronounced in Security and Compute and also evident in Network Services.
Five9 Inc.
Zacks Rank #1 Five9 provides intelligent cloud software for contact centers in the United States, India, and internationally. FIVN offers a virtual contact center cloud platform that delivers a suite of applications, enabling a broad range of contact center-related customer service, sales, and marketing functions.
Extensive AI Adoptions
FIVN’s platform comprises interactive virtual agents, agent assistance, workflow automation, workforce engagement management, AI insights, and AI summaries. It allows the management and optimization of customer interactions across voice, chat, email, web, social media, and mobile channels directly or through its application programming interfaces.
FIVN has been benefiting from the growing adoption of AI tools in its call center services, with personalized AI agents emerging as a major growth driver. Five9 is also strengthening its competitive position through AI Agents, Generative AI Studio and partnerships such as its enterprise AI solution with Google Cloud of Alphabet Inc. (GOOGL - Free Report) .
Management believes AI significantly expands its addressable market by extending beyond cloud contact center software into AI-driven labor automation, creating a substantially larger long-term opportunity.
Strong Estimate Revisions
Five9 has an expected revenue and earnings growth rate of 10.3% and 9.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has remained the same over the last 30 days.
FIVN has an expected revenue and earnings growth rate of 10% and 16.2%, respectively, for the next year. The Zacks Consensus Estimate for next-year’s earnings has remained the same over the last 30 days.
Attractive Valuation
Five9 is currently trading at an attractive valuation compared to its peers. The stock has a forward price/earnings (P/E) of 10.57X, below the industry’s P/E of 19.01X and the S&P 500’s P/E of 17.28X. It has a price/sale (P/S) of 2.19X compared with the industry’s P/S of 3.00X and the S&P 500’s P/S of 2.94X. Moreover, FIVN has a price/book (P/B) of 3.35X, lower than the industry’s P/B of 3.40X and the S&P 500’s P/B of 3.60X.
Workiva Inc.
Zacks Rank #1 Workiva offers an AI cloud-based and mobile-enabled platform for enterprises to collect, manage, report and analyze critical business data in real time. WK provides solutions for compliance, risk, sustainability and management reporting, as well as enterprise risk management.
WK incorporates purpose-built AI agents and data intelligence layers, into its enterprise reporting. WK serves the manufacturing and materials, energy and utilities, financial services, healthcare, media and entertainment, real estate, retail, consumer goods, services, transportation and technology and telecom industries.
Strong Estimate Revisions
Workiva has an expected revenue and earnings growth rate of 17.8% and 85.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13.4% over the last 60 days.
WK has an expected revenue and earnings growth rate of 15.1% and 21.9%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 17.2% over the last 60 days.
Solid Price Upside Potential
The short-term average price target of brokerage firms represents an increase of 24.7% from the last closing price of $71.88. The brokerage target price is currently in the range of $80-$105. This indicates a maximum upside of 45.9% and no downside.
View the Zacks #1 Rank List
Image: Shutterstock
Buy 3 Mid-Cap AI Internet Software Q3 Winners Set to Gain More in Q4
Key Takeaways
U.S. stock markets ended the last quarter predominantly in positive territory despite a volatile September. This was primarily driven by a solid performance of the technology sector. Most importantly, several Internet software developers have flourished notwithstanding the fear that artificial intelligence (AI) will cannibalize the traditional enterprise software space. Heightened geopolitical risks and tariff uncertainties were the other headwinds.
Here, we recommend three such companies with a favorable Zacks Rank. These stocks provided more than 30% returns in third-quarter 2026. Their current favorable Zacks Rank indicates more room for growth in the fourth quarter.
These are: Fastly Inc. (FSLY - Free Report) , Five9 Inc. (FIVN - Free Report) and Workiva Inc. (WK - Free Report) . Each of our picks currently carries either a Zacks Rank #1 (Strong Buy) or 2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The chart below shows the price performance of our three picks in the third quarter.
Image Source: Zacks Investment Research
Fastly Inc.
Zacks Rank #2 Fastly provides infrastructure software offering cloud computing, image optimization, security, edge-computing technology and streaming solutions expanding into areas such as application security and AI-driven workloads. The company’s Fastly AI Accelerator is a semantic caching solution that allows developers to optimize their LLM generative AI applications.
AI Traffic Creates New Monetization Paths
FSLY is aligning its platform with machine traffic that requires real-time decisions on access, security and monetization. Management said AI-generated traffic is growing roughly 6.5 times faster than human traffic, with related demand appearing most clearly in Security and Compute and also in Network Services.
FSLY’s Edge Cloud Platform offers more efficient performance as developers need only a single line of code instead of repeated calls to the AI provider to update their application to a new API endpoint.
Strong Estimate Revisions
Fastly has an expected revenue and earnings growth rate of 18.8% and more than 100%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 65.6% over the last 60 days.
FSLY has an expected revenue and earnings growth rate of 14.4% and 24.8%, respectively, for the next year. The Zacks Consensus Estimate for next-year’s earnings has improved 6.5% over the last 30 days.
Long-Term View
FSLY views AI-driven demand as a tailwind across the business. Fastly is expanding capacity while retaining a more measured infrastructure model than peers building separate networks or GPU-heavy platforms.
AI tool usage is contributing to traffic growth among some of the company’s fastest-growing customers, with the impact most pronounced in Security and Compute and also evident in Network Services.
Five9 Inc.
Zacks Rank #1 Five9 provides intelligent cloud software for contact centers in the United States, India, and internationally. FIVN offers a virtual contact center cloud platform that delivers a suite of applications, enabling a broad range of contact center-related customer service, sales, and marketing functions.
Extensive AI Adoptions
FIVN’s platform comprises interactive virtual agents, agent assistance, workflow automation, workforce engagement management, AI insights, and AI summaries. It allows the management and optimization of customer interactions across voice, chat, email, web, social media, and mobile channels directly or through its application programming interfaces.
FIVN has been benefiting from the growing adoption of AI tools in its call center services, with personalized AI agents emerging as a major growth driver. Five9 is also strengthening its competitive position through AI Agents, Generative AI Studio and partnerships such as its enterprise AI solution with Google Cloud of Alphabet Inc. (GOOGL - Free Report) .
Management believes AI significantly expands its addressable market by extending beyond cloud contact center software into AI-driven labor automation, creating a substantially larger long-term opportunity.
Strong Estimate Revisions
Five9 has an expected revenue and earnings growth rate of 10.3% and 9.8%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has remained the same over the last 30 days.
FIVN has an expected revenue and earnings growth rate of 10% and 16.2%, respectively, for the next year. The Zacks Consensus Estimate for next-year’s earnings has remained the same over the last 30 days.
Attractive Valuation
Five9 is currently trading at an attractive valuation compared to its peers. The stock has a forward price/earnings (P/E) of 10.57X, below the industry’s P/E of 19.01X and the S&P 500’s P/E of 17.28X. It has a price/sale (P/S) of 2.19X compared with the industry’s P/S of 3.00X and the S&P 500’s P/S of 2.94X. Moreover, FIVN has a price/book (P/B) of 3.35X, lower than the industry’s P/B of 3.40X and the S&P 500’s P/B of 3.60X.
Workiva Inc.
Zacks Rank #1 Workiva offers an AI cloud-based and mobile-enabled platform for enterprises to collect, manage, report and analyze critical business data in real time. WK provides solutions for compliance, risk, sustainability and management reporting, as well as enterprise risk management.
WK incorporates purpose-built AI agents and data intelligence layers, into its enterprise reporting. WK serves the manufacturing and materials, energy and utilities, financial services, healthcare, media and entertainment, real estate, retail, consumer goods, services, transportation and technology and telecom industries.
Strong Estimate Revisions
Workiva has an expected revenue and earnings growth rate of 17.8% and 85.4%, respectively, for the current year. The Zacks Consensus Estimate for current-year earnings has improved 13.4% over the last 60 days.
WK has an expected revenue and earnings growth rate of 15.1% and 21.9%, respectively, for the next year. The Zacks Consensus Estimate for next year’s earnings has improved 17.2% over the last 60 days.
Solid Price Upside Potential
The short-term average price target of brokerage firms represents an increase of 24.7% from the last closing price of $71.88. The brokerage target price is currently in the range of $80-$105. This indicates a maximum upside of 45.9% and no downside.