Twilio stock dropped 40% due to market uncertainty, but potential for growth in AI.
From Yahoo Finance: 2025-04-19 13:05:00
Cloud communications provider Twilio (NYSE: TWLO) saw impressive growth in Q4 of 2024, but shares have since dropped 40% from their 52-week high due to market uncertainty and mixed quarterly results. Despite this, Twilio’s focus on AI in cloud communications could lead to a turnaround in its upcoming earnings report on May 1.
Twilio reported an 11% revenue increase and 16% GAAP earnings growth in Q4 of 2024, beating revenue estimates but falling slightly short on earnings. The company’s guidance for Q1 of fiscal 2025 anticipates an 8-9% revenue increase and a 13% earnings jump year-over-year, below consensus estimates.
The demand for Twilio’s AI-based communication tools is increasing, leading to more cross-selling opportunities and potentially higher earnings. The company’s active customer base is steadily growing, with 9,000 customers using AI-focused cloud communications tools in 2024, showcasing room for future growth and revenue expansion.
Twilio’s addressable market is set to increase significantly with the rise of AI tools in cloud communications and CDP markets. The company predicts an addressable revenue opportunity of $119 billion by 2028, with conversational AI adding another $39 billion to that opportunity over the next three years, indicating potential for substantial growth.
With Twilio projecting a rise in non-GAAP operating margin from 16% in 2024 to 21-22% in 2027, investors can expect solid bottom-line growth in the coming years. Earnings are forecasted to increase by 17% in 2026 and almost 22% in 2027, potentially leading to a 69% stock price increase by 2027.
Despite recent setbacks, Twilio’s focus on AI and cloud communications presents a promising investment opportunity. With potential for substantial growth in revenue and earnings, along with a projected increase in operating margin, Twilio’s stock could see significant gains in the next few years, making it an attractive option for investors.
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