This Artificial Intelligence (AI) Stock Delivered Bigger Gains Than Nvidia. It Can Skyrocket Higher.

Core Viewpoint - Twilio's stock has surged 148% in the past six months, driven by the growing adoption of artificial intelligence (AI) and its potential impact on the company's business [1][2]. Group 1: Company Performance - Twilio's stock rally began in October 2024 after the company reported strong results and better-than-expected guidance [2]. - In Q3 2024, Twilio's revenue increased by 10% year-over-year to $1.13 billion, with more customers and increased spending from existing customers, aided by AI [7]. - Preliminary Q4 2024 numbers indicate an 11% year-over-year revenue increase, surpassing guidance expectations [12]. Group 2: Market Potential - Twilio operates in the communications platform-as-a-service (CPaaS) market, which has seen a slowdown in 2023 but is expected to benefit from AI [5][6]. - The total addressable market for Twilio is projected to reach $158 billion by 2028, with $39 billion attributed to AI-based opportunities [8]. - As of Q3 2024, 9,000 of Twilio's 320,000 active customer accounts were building AI applications on its platform, contributing $260 million in trailing-12-month revenue from AI solutions [9]. Group 3: Growth Opportunities - The number of active customer accounts purchasing add-on products increased by 16% year-over-year in Q3 2024, indicating strong demand for AI solutions [11]. - Twilio's management anticipates a non-GAAP operating margin of 21% to 22%, up from 16% in the previous quarter, suggesting robust bottom-line growth [14]. - The company forecasts cumulative free cash flow of $3 billion over the next three years, a significant increase from the $692 million generated in the past three years [15]. Group 4: Valuation and Investment Considerations - Twilio's current price-to-sales ratio is 5.4, and its forward earnings multiple is 32, with earnings expected to jump by 50% in 2024 [16]. - The stock's remarkable rally appears sustainable, making it an attractive option for investors looking for AI-related investments [16].