Twilio Inc., together with its subsidiaries, provides customer engagement platform solutions in the United States and internationally. It offers application programming interfaces and software solutions for communications between customers and end users, covering messaging, voice, email, video interactions, digital engagement centers, marketing campaigns, and user authentication and identity solutions. The company also offers software products for building direct and personalized relationships with end users, including Segment, a platform that unifies real-time information collected throughout each customer's journey into a unique profile. Twilio Inc. was incorporated in 2008 and is headquartered in San Francisco, California.
Twilio's AI-driven growth gets a reality check from HSBC
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AI deals and strong Q2 fuel growth story Twilio signed a seven-figure AI conversation deal with Car Finance 247 and added wins at Vozzi, Olo and Atlassian. Q2 revenue rose 22% to $1.50 billion, free cash flow jumped 34%, and management raised its 2026 organic growth forecast. This shows AI demand is real and broadens beyond messaging and voice.
This is the core new positive driver: concrete AI customer wins and raised guidance that directly lift earnings expectations.
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Morgan Stanley sees AI agents boosting Twilio's volumes Morgan Stanley argued that consumer AI agents like Meta's Muse could increase the number of calls and messages businesses handle, not replace them. Twilio offers the broadest exposure because it charges per use, so more agent-initiated interactions mean more revenue. The analyst called it a medium-term tailwind, not an immediate catalyst.
This explains the bull case that AI agents expand Twilio's usage-based revenue, a key reason investors are optimistic.
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HSBC downgrade raises doubts on AI value capture HSBC cut Twilio to Reduce from Hold, sending shares down about 6% over two days. The analyst warned that while AI agents may drive more traffic, Twilio might not capture a larger share of the revenue, as Meta could use other providers or connect directly with carriers. This is a real counterweight to the AI growth narrative.
This is the main new negative driver: a prominent downgrade questioning how much Twilio actually profits from the AI agent boom.
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Peer results confirm sector strength Bandwidth, a Twilio competitor, reported 22% revenue growth and the highest guidance raise among software peers. Twilio's own Q2 revenue also beat expectations by 5%. This peer strength suggests the communications software market is healthy, supporting Twilio's growth outlook.
Peer performance provides context that Twilio's strong results are part of a broader sector trend, reinforcing confidence.
Q3 2026
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Twilio Q2 Beat and AI Deals Lift Stock, HSBC Downgrade Caps Gains
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Strong Q2 earnings and raised guidance Twilio reported 22% revenue growth to $1.5 billion, record profitability, and 34% higher free cash flow, beating expectations and easing fears that AI would disrupt its business. The stock rose 31%.
This was the main positive force driving the stock during the period.
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New AI deals and analyst support Twilio announced AI-related deals with Car Finance 247, Vozzi, Olo, and Atlassian. Morgan Stanley suggested AI agents could increase usage volumes, reinforcing the growth story.
These developments supported the bullish narrative and investor confidence.
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Peer Bandwidth's strong results Bandwidth, a peer in the communications space, reported strong results, confirming overall sector health and indirectly supporting Twilio's stock.
Sector confirmation provided an additional tailwind for Twilio shares.
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HSBC downgrade on AI monetization concerns HSBC downgraded Twilio to Reduce, warning it may not capture AI-driven revenue growth if Meta routes traffic through other providers or directly to carriers. Shares fell about 6% on the news.
This was the main counterweight that limited gains and highlighted a key risk.
News & notes movingTWLO
United States
Cloud & Digital Infrastructure▲
Twilio to Join S&P 500 as S&P Dow Jones Reshuffles Indices
S&P Dow Jones Indices announced a series of benchmark rebalancings on Thursday afternoon, effective prior to the market open on Tuesday, Oct. 6. Cloud communications software maker Twilio Inc Class A will join the flagship S&P 500, moving up from the S&P MidCap 400, replacing Warner Bros Discovery Inc, which is being acquired by S&P 500 constituent Paramount Skydance Corp in a deal nearing final completion. Twilio shares rose 1.6% in extended trading, while semiconductor test equipment producer FormFactor Inc will fill Twilio's former spot in the S&P MidCap 400 as it shifts up from the S&P SmallCap 600. The small-cap benchmark will in turn absorb SaaS platform Workiva Inc, which replaces FormFactor and gained 2.7% after-hours. In a separate structural shift, newly formed Consumer Staples entity Vylor Inc. joined the S&P 500 on Thursday following its spinoff from Corteva Inc, which will transition into the S&P MidCap 400 on Oct. 6, taking the spot of Olin Corporation; Olin moves to the S&P SmallCap 600 to replace chipmaker Qorvo Inc, which is being acquired by Skyworks Solutions Inc in a pending transaction that prompted the chain of small-cap reallocations.
BofA Downgrades Nike, Stifel Upgrades Microsoft in Week of Analyst Calls
Bank of America downgraded Nike to Underperform from Neutral, with analyst Lorraine Hutchinson cutting her price target to $30 from $47 and lowering fiscal 2027 and 2028 EPS estimates by 11% and 12% to $1.43 and $1.87, saying the turnaround is taking longer to materialize. Stifel upgraded Microsoft to Buy from Hold, with analyst Brad Reback raising his price target to $575 from $530 and citing confidence in sustaining mid-to-upper-teens revenue growth. J.P. Morgan upgraded CoreWeave to Overweight from Neutral and lifted its price target to $125 from $120, pointing to favorable compute pricing and a greater willingness to lean into short-term contracts at premium pricing. UBS downgraded PG&E to Neutral from Buy and cut its price target to $14 from $19, lowering its long-term EPS growth forecast to 8.5% from 9% as the wildfire liability reform catalyst fades. KeyBanc downgraded Comcast to Underweight with an $18 price target, expecting domestic broadband net losses to widen to 665,000 in 2027, while HSBC downgraded Twilio to Reduce from Hold and Rosenblatt initiated SanDisk at Buy with a $2,400 price target.
CMCSA · Capital · Negative KeyBanc downgraded Comcast to Underweight with an $18 price target, expecting domestic broadband net losses to widen to 665,000 in 2027.
CRWV · Capital · Positive J.P. Morgan upgraded CoreWeave to Overweight and lifted its price target to $125, citing favorable compute pricing and premium short-term contracts.
MSFT · Capital · Positive Stifel upgraded Microsoft to Buy and raised its price target to $575, citing confidence in sustaining mid-to-upper-teens revenue growth.
NKE · Capital · Negative Bank of America downgraded Nike to Underperform and cut its price target to $30 from $47, lowering EPS estimates as the turnaround takes longer.
PCG · Capital · Negative UBS downgraded PG&E to Neutral and cut its price target to $14 from $19, lowering long-term EPS growth forecast as the wildfire liability reform catalyst fades.
SNDK · Capital · Positive Rosenblatt initiated SanDisk at Buy with a $2,400 price target, an analyst valuation call.
Twilio Fair Value Estimate Raised to US$263.04 on AI Communications Focus
Twilio's fair value estimate has been lifted to US$263.04 from US$200.92, a reset analysts tie to a stronger focus on AI driven communications, personal AI agents, and execution across the company's core products. The revised model assumes revenue growth of 10.80%, down slightly from 10.83% previously, while net profit margin is cut to 6.32% from 9.52% and the future P/E jumps to 114.5x from 55.1x, with the discount rate now 9.30% versus 8.85%. On the bullish side, Goldman Sachs raised its Twilio target to US$330, TD Cowen went as high as US$300, Morgan Stanley set US$261, and Stifel upgraded the stock to Buy with a US$260 target, citing restructuring, tighter focus on core products, and AI centric R&D. HSBC took the opposite view, downgrading Twilio to Reduce with a US$211 target after a rally linked to Meta Muse, arguing the gains leave less room for error and questioning how much value Twilio can capture from Muse related traffic given Meta's own AI voice stack.
Artificial Intelligence › AI Applications & Copilots Technology
TWLO · Capital · Positive Analysts raised Twilio's fair value estimate to US$263.04 and multiple banks lifted price targets/upgraded the stock on AI communications focus and restructuring.
Akamai Technologies announced a seven-year contract and $11.6 billion deal with Anthropic, sending its shares up 5%, and issued a warrant letting Anthropic buy up to roughly 5% of its shares at an exercise price of $111.33 each. Atlas Energy Solutions rallied 17% after saying two subsidiaries executed separate cost reimbursement agreements with a leading frontier AI lab, while Genius Sports jumped 13% on a JPMorgan overweight initiation and Twilio fell about 6% after HSBC cut its rating to a sell equivalent. People Inc, the publisher owned by Barry Diller, rose 10% after The Wall Street Journal reported that MGM Resorts is weighing a bid to purchase the publishing giant, following People's withdrawal of its proposal to buy the casino operator. Scholastic slid 9% after posting an adjusted fiscal first-quarter loss of $3.63 per share on revenue of $216.8 million, a 4% year-over-year decline. Costco Wholesale rose 2.7% on better-than-expected fiscal fourth-quarter results, earning an adjusted $6.60 per share on revenue of $95.72 billion, above the $6.53 per share and $94.86 billion analysts polled by LSEG expected, while Microsoft gained 3% on a refreshed Copilot app and Meta Platforms fell more than 3% as traders took profits.
AKAM · Capital · Positive Akamai issued a warrant letting Anthropic buy up to roughly 5% of its shares at $111.33 each.
AKAM · Demand · Positive Akamai landed a seven-year $11.6 billion contract with Anthropic, sending shares up 5%.
COST · Capital · Positive Costco reported better-than-expected fiscal Q4 results, with adjusted EPS of $6.60 and revenue of $95.72 billion above estimates.
GENI · Capital · Positive Genius Sports jumped 13% on a JPMorgan overweight initiation.
PPLI · Capital · Positive People Inc rose 10% after WSJ reported MGM Resorts is weighing a bid to purchase the publishing giant.
SCHL · Capital · Negative Scholastic posted an adjusted fiscal Q1 loss of $3.63 per share on revenue down 4% year-over-year.
HSBC Cuts Twilio to Reduce on Meta Muse AI Uncertainty
HSBC downgraded Twilio to Reduce from Hold, sending the communications software company's shares down about 3% early Friday, while keeping its $211 price target. The brokerage cited uncertainty over how much economic value Twilio can capture from Meta Platforms' Muse AI agent. HSBC said rising AI-agent activity could lift demand for calls, messages and authentication services, but more traffic does not necessarily mean a larger share of the resulting revenue for Twilio. The firm expects Twilio's role with Muse to center mainly on connecting AI-driven calls to traditional phone networks and handling transactional or verification messages, areas that face competition from other communications providers and wholesale carriers. HSBC also noted Meta could pick different communications providers or build more direct connections with carriers, limiting the portion of Muse-related spending flowing through Twilio. The downgrade comes as investors have recently linked Twilio to Muse's growth; Reuters reported the AI assistant reached 2.8 million downloads within its first 12 days.
Artificial Intelligence › Agentic AI & Autonomous Workflows Demand
TWLO · Capital · Negative HSBC downgraded Twilio to Reduce from Hold on uncertainty over how much economic value it can capture from Meta's Muse AI agent.
HSBA.LSE · Capital · Neutral HSBC is the brokerage issuing the Twilio downgrade and $211 price target, but the news is about Twilio, not HSBC's own business.
META · · Neutral Muse AI agent's rapid adoption (2.8M downloads in 12 days) is context for Twilio's downgrade, but no direct impact on Meta is stated.
META · Competition · Neutral Meta's Muse AI agent is the subject of the uncertainty; HSBC notes Meta could pick other communications providers or build direct carrier connections, but no direct impact on Meta itself.
Akamai Surges 21.3% on $11.6 Billion Anthropic Cloud Deal
Akamai Technologies surged 21.3% in premarket trading after announcing a seven-year, $11.6 billion cloud services commitment from AI company Anthropic, designed to support Anthropic's growing CPU workload demands across Akamai Cloud's distributed infrastructure. The deal includes provisions allowing the relationship to expand by up to an additional $9 billion, potentially taking the total commitment to about $20 billion, and Akamai also disclosed a hardware supply agreement with Lenovo and authorized contract manufacturer Jabil to procure about $1.7 billion in memory components. People Incorporated rose 6.5% in premarket trading after The Wall Street Journal reported that MGM Resorts International is weighing a potential takeover bid for Barry Diller's media conglomerate, with an offer potentially coming within days, just one day after People Incorporated withdrew its own $48.30-per-share cash proposal to acquire MGM's remaining public shares. Select Water Solutions rose 5.5% after announcing a definitive agreement to acquire Pilot Water Solutions for $700 million, plus up to $15 million in potential contingent consideration, in a transaction including $600 million in cash and $100 million in Class A common stock. Prime Medicine climbed 11.7% in after-hours trading to $3.49 after the U.S. Food and Drug Administration cleared its Investigational New Drug application for PM647, an investigational in vivo Prime Editor designed to correct the E342K mutation in the SERPINA1 gene, the root cause of Alpha-1 Antitrypsin Deficiency, paving the way for a global first-in-human Phase 1/2 clinical trial. On the downside, Comcast slipped 1.6% in premarket trading to $21.77 after KeyBanc downgraded the stock to Underweight from Sector Weight with an $18 price target, Twilio fell 3.7% after HSBC downgraded it to Reduce from Hold with a $211 price target, Zscaler fell 3.6% after naming Ross Tackett Chief Revenue Officer effective Oct. 1, succeeding Mike Rich, and Scholastic tumbled 11% after reporting fiscal first-quarter 2027 results that missed expectations, with revenue down 3.9% year over year to $216.8 million and an adjusted loss per share of $3.63.
Twilio Shares Jump 21.7% After Strong Q2 and Raised 2026 Growth Outlook
Twilio reported a strong Q2 with 22% year-on-year revenue growth and raised its full-year 2026 organic growth outlook to 18% to 18.5%, sending its shares up 21.7%. The company highlighted robust demand across messaging, voice, and software add-ons tied to AI-driven communications, with growing interest in AI agents such as Meta's Muse underscoring Twilio's role as a key infrastructure provider for higher-volume, automated customer interactions. Twilio's narrative projects $7.2 billion in revenue and $686.9 million in earnings by 2029, requiring 10.8% yearly revenue growth and about a $582.9 million earnings increase from $104.0 million today. Some of the lowest ranked analysts were already far more cautious, assuming revenue of about US$7.2 billion and earnings around US$518 million by 2029, amid concerns about CPaaS commoditization and rising compliance costs. The article was produced by Simply Wall St.
Morgan Stanley: AI agents may lift call-center firms, not replace them
Morgan Stanley said in a note Wednesday that the rise of consumer AI agents such as Meta's Muse could benefit communications and software vendors long seen as vulnerable to automation, rather than threaten them. Analyst Elizabeth Porter argued that agents like Muse and Instinct, personal assistants that complete tasks on users' behalf, could expand the volume of interactions businesses field, cushioning contact-center vendors whose seat-based models have been under pressure from AI. She wrote that consumer agents lower the effort required to engage a business while enterprise AI lowers the cost of responding, potentially expanding communications volumes and usage-based monetization. Porter believes Twilio offers the broadest exposure, benefiting from the messages and calls an agent initiates to complete a task, such as authentication texts, reservation confirmations and follow-ups, on top of its existing usage and software-attachment model. For contact-center names such as NICE, Five9 and RingCentral, she said higher volumes could slow the risk of seat reductions while automation priced by interaction expands, and among web-presence providers she sees Wix as better placed than GoDaddy, with Shopify the most direct beneficiary in e-commerce software. Porter cautioned this is a stronger medium-term bull case rather than a near-term catalyst, and said she is wary of extrapolating upside into third-quarter results.
Artificial Intelligence › Agentic AI & Autonomous Workflows ▲Demand
Artificial Intelligence › AI Applications & Copilots ▲Demand
TWLO · Demand · Positive Porter says Twilio offers the broadest exposure, benefiting from messages and calls AI agents initiate on top of its usage-based model.
8089.JP · Demand · Positive Morgan Stanley argues higher interaction volumes from consumer AI agents could slow seat-reduction risk for contact-center vendors like NICE.
FIVN · Demand · Positive Morgan Stanley says higher interaction volumes from consumer AI agents could slow seat-reduction risk for contact-center vendors like Five9.
NICE · Demand · Positive Morgan Stanley says higher interaction volumes from AI agents could slow seat-reduction risk for NICE while interaction-priced automation expands.
RNG · Demand · Positive Higher interaction volumes from AI agents could slow seat reductions while interaction-priced automation expands for RingCentral.
SHOP · Demand · Positive Morgan Stanley calls Shopify the most direct beneficiary in e-commerce software from the AI-agent trend.
Bandwidth Posts Strong Q2 With Highest Guidance Raise Among Software Development Peers
Bandwidth reported second-quarter revenues of $219.9 million, up 22.2% year on year, exceeding analysts' expectations by 1.4%, and posted the highest guidance raise among the 12 software development stocks tracked. The company, which provides cloud-based communications software and APIs for customers including Microsoft, Google, and Zoom, saw revenue and EBITDA guidance for next quarter beat analysts' expectations, and its stock is up 3.8% since reporting, trading at $54.24. Across the group, revenues beat consensus estimates by 3.2% and next quarter's revenue guidance came in 1.8% above, with share prices up 11% on average since the latest results. Fastly delivered the best quarter in the group with revenues of $183.3 million, up 23.3% year on year and 5.3% above expectations, while Akamai posted the weakest performance, with revenues of $1.1 billion, up 5.4% year on year and 0.6% above estimates. Twilio reported revenues of $1.50 billion, up 22% year on year and 5% above expectations, and PagerDuty reported revenues of $124.4 million, flat year on year but 0.9% above expectations, adding 126 customers to reach a total of 15,506.
Cloud & Digital Infrastructure › API & Integration (iPaaS) ▲Demand
Cloud & Digital Infrastructure › Edge & Content Delivery ▲Demand
Cloud & Digital Infrastructure › Observability & DevOps Demand
BAND · Capital · Positive Bandwidth beat Q2 revenue expectations and posted the highest guidance raise among the 12 tracked software development stocks.
AKAM · Capital · Negative Akamai posted the weakest performance in the group, with revenue up only 5.4% YoY and just 0.6% above estimates.
FSLY · Capital · Positive Fastly delivered the best quarter in the group, with revenue up 23.3% YoY and 5.3% above expectations.
TWLO · Capital · Positive Twilio reported revenue of $1.50 billion, up 22% YoY and 5% above expectations.
PD · Capital · Neutral PagerDuty revenue was flat YoY though 0.9% above estimates, adding 126 customers to reach 15,506.
Twilio AI Deals Expand as Car Finance 247 Signs Seven-Figure Win
Twilio Inc. is expanding its AI customer wins, with Car Finance 247 signing a seven-figure deal to use its new conversation layer. The customer's AI assistant, Carla, has handled about 288,000 customer conversations, and customers who interacted with Carla moved to approved leads at roughly 1.6 times the rate of those who did not, contributing to a multi-million-pound annual revenue uplift for the customer. Twilio is also winning deals with companies such as Vozzi, Olo and Atlassian, showing demand beyond traditional messaging and voice. Twilio's second-quarter 2026 revenues rose 22% year over year to $1.50 billion, with organic growth of 17%, while non-GAAP operating income increased 29% to $284.6 million and free cash flow grew 34% to $352.6 million. Management raised its 2026 organic revenue growth forecast to 13%-13.5%, and the Zacks Consensus Estimate for 2026 revenues is currently pegged at $5.96 billion, indicating a 17.7% year-over-year increase.
Artificial Intelligence › AI Applications & Copilots Demand
TWLO · Capital · Positive Q2 2026 revenues rose 22% to $1.50 billion with non-GAAP operating income up 29% and free cash flow up 34%, and management raised its 2026 organic revenue growth forecast.
TWLO · Demand · Positive Car Finance 247 signed a seven-figure deal for Twilio's AI conversation layer, with additional wins at Vozzi, Olo and Atlassian showing demand beyond messaging and voice.
Twilio Inc. has announced the rollout of four new platform capabilities in Latin America, aiming to strengthen its position in the AI-driven customer engagement market. The new features—Agent Connect, Conversation Orchestrator, Conversation Memory, and Conversation Intelligence—are designed to address common customer service issues such as fragmented conversations across channels. This move accompanies Twilio's Customer Insights Series report, which found that nearly all surveyed businesses struggle with understanding customer preferences and unifying data. For the third quarter, management projects revenue between $1.505 and $1.515 billion, representing 16% to 16.5% growth year-over-year, with adjusted diluted EPS estimated between $1.42 and $1.47. However, bears point to intense competition from Zendesk and Salesforce, as well as economic and regulatory risks in the region. Institutional interest is rising, with 72 hedge funds holding positions in Q2 2026, up from 64 in the prior quarter, and BlackRock remains the largest institutional investor with 16.63 million shares.
Enterprise Software Stocks Surge on AI-Driven Earnings
Shares of Twilio, Palantir Technologies, Zoom, PagerDuty, and nCino soared in afternoon trading after quarterly earnings and upbeat commentary signaled that artificial intelligence is driving growth across enterprise software rather than threatening legacy business models. The sector-wide rally, highlighted by a 20% surge in Salesforce, eased fears that AI would disrupt traditional platforms, with reports from Salesforce, CrowdStrike, and Okta showing AI as a catalyst for adoption and monetization. Salesforce's Agentforce annual recurring revenue reached $1.5 billion, and Slackbot surpassed 1 million active users in five months. CrowdStrike CEO George Kurtz cited AI's expansion of the attack surface as driving security demand, while Okta's AI-focused offerings contributed about 30% of new bookings and increased average contract values by roughly 40%. Among the movers, Twilio jumped 5.1%, Palantir rose 4.8%, Zoom gained 6.3%, PagerDuty climbed 4.4%, and nCino advanced 6.4%, with nCino trading at $23.30, down 28.7% from its 52-week high of $32.69.
Twilio Raised Its Full-Year Growth Guide to 18% and Posted Record Revenue of $1.5 Billion
Twilio raised its 2026 revenue growth outlook to 18% to 18.5%, up from a prior forecast of 14% to 15%, and reported record quarterly revenue of $1.50 billion for the second quarter, a 22% year-over-year increase. The company's organic growth reached 17%, well above the 9.5% to 10.5% full-year organic outlook given three months earlier, and its dollar-based net expansion rate improved to 116% from 108% a year ago. Non-GAAP operating income rose 29% to $285 million, while free cash flow hit $353 million, though most of the $1.07 billion in GAAP net income came from a one-time tax benefit. Shares surged about 25% on Friday to close at $241.28, giving the company a market value of roughly $36.6 billion, or about 32 times its raised free cash flow outlook.
Palantir Technologies Stock Surges Again on Renewed Software Optimism
Palantir Technologies stock surged as much as 9.9% on Friday, extending a rally that began after the company reported its 12th consecutive quarter of accelerating revenue growth. The data-mining and AI specialist's second-quarter revenue of $1.94 billion rose 93% year-over-year, its highest ever growth rate, driving adjusted earnings per share up 156% to $0.41. The broader software sector also got a boost as several enterprise software companies, including Twilio, reported better-than-expected results, easing fears that AI would decimate the software business. Twilio's stock jumped as much as 31% after it posted record profits and cash flow, helping convince investors that AI won't immediately displace enterprise software. Palantir's triple-digit profit growth helps justify its valuation at 74 times next year's expected earnings.
Atlassian Soars 34%, Twilio Leaps 27%, Cloudflare Advances 9% on Strong Results and Upgraded Outlooks
Atlassian surged 34%, Twilio jumped 27%, and Cloudflare gained 9% after each delivered strong quarterly results and raised their growth outlooks. Bank of America upgraded Atlassian to Buy and raised its target to $175, calling the company's workflow and collaboration data an increasingly valuable AI asset. Goldman Sachs raised Cloudflare's price target to $389, citing agentic AI adoption, 36% revenue growth, and record large-customer net additions. Jefferies raised its Atlassian target to $200, while Wells Fargo raised its Twilio target to $275, reflecting broad analyst optimism across the software sector.
Atlassian surges 29% premarket on earnings beat, Trade Desk plunges 27% on miss
Several companies made significant premarket moves following their latest earnings reports. Atlassian shares jumped more than 29% after beating FactSet consensus on revenue and guidance for its fourth quarter, though its 13% year-over-year revenue growth forecast fell short of the 13.4% expectation. Wendy's dropped 2% as global sales declined more than 6%, driven by an 8.2% U.S. decline, and the company withdrew its 2026 financial outlook despite beating FactSet consensus on earnings, revenue, and adjusted EBITDA. Solar stocks rose after President Trump imposed tariffs on imported solar panel components, with First Solar up more than 5%, Invesco Solar ETF up nearly 3%, and SolarEdge Technologies up 2%. Airbnb surged nearly 7% after posting second-quarter earnings of $1.37 per share on revenue of $3.61 billion, exceeding LSEG estimates of $1.25 per share and $3.58 billion. Twilio soared more than 17% as it guided for adjusted earnings of $1.42 to $1.47 per share on revenue of $1.51 billion to $1.52 billion, above the $1.39 per share and $1.46 billion consensus, and raised its full-year revenue growth outlook to 18% to 18.5% from 14% to 15%, topping the 14.8% forecast. Trade Desk tumbled 27% after second-quarter adjusted earnings of 34 cents per share on revenue of $715 million missed LSEG estimates of 40 cents and $751 million. Cloudflare jumped more than 16.5% on strong guidance, expecting third-quarter adjusted earnings of 34 cents per share on revenue of $736 million to $737 million, compared with consensus of 32 cents and $722 million, and also beat second-quarter estimates. Akamai Technologies rose 8.3% after second-quarter adjusted earnings of $1.59 per share on revenue of $1.10 billion topped LSEG forecasts of $1.57 per share and $1.09 billion.
Airbnb, Twilio surge while Trade Desk, Sweetgreen plunge in after-hours trading
Several companies made significant after-hours moves following their quarterly earnings reports. Airbnb surged about 7% after posting second-quarter earnings of $1.37 per share on revenues of $3.61 billion, beating analyst forecasts of $1.25 per share and $3.58 billion. Twilio jumped roughly 16% on strong current-quarter guidance, projecting adjusted earnings of $1.42 to $1.47 per share on revenue of $1.51 billion to $1.52 billion, above consensus estimates. Trade Desk tumbled 22% after its adjusted earnings of 34 cents per share and revenue of $715 million missed expectations of 40 cents and $751 million. Sweetgreen plunged 14% as its second-quarter loss of 22 cents per share on $193 million in revenue fell short of the anticipated loss of 15 cents on $195 million. DraftKings slipped over 1.5% after revenue of $1.44 billion missed the $1.51 billion estimate, though it reaffirmed its 2026 fiscal-year guidance. Cloudflare rallied 17% on upbeat guidance, while Akamai Technologies gained 12% and Instacart rose more than 8% on better-than-expected revenue. Dropbox fell nearly 6% after its non-GAAP gross margin of 81.6% narrowly missed the 81.7% consensus.
Four Software Stocks Likely to See Revaluation During US Earnings Season
The second-quarter earnings season for US stocks is likely to drive a revaluation of software-related names. In particular, the impact of AI implementation on business performance is in focus, with attention centered on companies in the agentic AI space such as ServiceNow and Twilio. ServiceNow reported solid earnings on July 22, and a revaluation of its oversold stock appears inevitable. Twilio is set to report on August 6 and is drawing market interest as a prime beneficiary of AI tailwinds. In semiconductors, Qualcomm is eyeing a revaluation opportunity as the era of edge AI and physical AI approaches. These stocks have been oversold amid concerns over the so-called death of SaaS, but earnings are expected to prove their undervaluation and trigger sharp rebounds.
Software Development Stocks Surge 36.3% on Average After Strong Q1 Earnings
The 12 software development stocks tracked by this publication reported a strong first quarter, with revenues beating analysts' consensus estimates by 2.9% and next quarter's revenue guidance coming in 1.4% above expectations. Share prices have risen 36.3% on average since the latest earnings results. Twilio posted revenues of $1.41 billion, up 20% year on year and exceeding estimates by 4.7%, while Datadog achieved the biggest analyst estimate beat with revenues of $1.01 billion, up 32.2% year on year. Akamai delivered the weakest performance, with revenues of $1.07 billion, up 5.8% year on year and in line with expectations. Cloudflare recorded the fastest revenue growth in the group at 33.5% year on year, reaching $639.8 million.
Stifel upgrades Shopify to Buy, Citi downgrades PepsiCo to Neutral
Stifel upgraded Shopify to Buy from Hold with a price target of $150, up from $110, citing the company's share-gaining playbook in e-commerce and leadership in agentic commerce. Citi downgraded PepsiCo to Neutral from Buy with a price target of $145, down from $170, due to continued weakness in North America despite strategic actions. Among other notable calls, Wells Fargo upgraded Seagate to Overweight, Stifel upgraded Twilio to Buy, and Citi upgraded Toll Brothers to Buy, while Evercore ISI downgraded Travelers to In Line, Barclays downgraded Public Storage to Equal Weight, and Citi downgraded both Lamar Advertising and Ryder to Neutral. New initiations included Susquehanna starting IBM at Neutral, Truist starting Travelers at Buy, BTIG starting Equinix and Digital Realty at Buy, JPMorgan starting Honeywell Aerospace at Neutral, and BMO Capital starting Roper Technologies at Market Perform.
Twilio CEO sells 14,458 shares as stock trades 9% above fair value estimate
Twilio CEO Khozema Shipchandler sold 14,458 shares, drawing attention to the stock's valuation after a strong rally. Twilio closed at $218.60, about 9% above a widely followed fair value estimate of $200.92, which is based on a discount rate of 8.85%. The stock has returned 85.81% over the past 90 days and 86.33% over the past year, though its five-year total shareholder return remains down 40.32%. A separate discounted cash flow model suggests a fair value of $223.56, implying the stock is about 2.2% undervalued. The sale comes amid growing adoption of AI-powered communications, which is expanding Twilio's addressable market, but reliance on lower-margin messaging and regulatory pressures could challenge margins.
StockStory has identified three growth stocks that investors should steer clear of, citing concerns over their ability to sustain high growth rates. The firm is cautious on Twilio due to a net revenue retention rate of 110% that lags industry standards and a gross margin of 48.7% reflecting high servicing costs. It recommends selling Franklin BSP Realty Trust, pointing to stagnating net interest income, a 7.5% annual decline in earnings per share over three years, and a low return on equity of 4.5%. Excelerate Energy raises worries because of its smaller revenue base of $1.35 billion, which limits economies of scale, and a below-peer gross margin of 29.5%.
Twilio's 300 P/E Ratio Hard to Justify Amid Revenue Deceleration
Twilio's stock has entered a 20% correction, and its price-to-earnings ratio near 300 is difficult to justify given the company's own guidance for slowing revenue growth. The company reported 20% year-over-year revenue growth in the first quarter but expects only 15.5% to 16.5% growth in the second quarter and 14% to 15% for the full year 2026. While Goldman Sachs issued a $300 price target citing Twilio's positioning in agentic AI infrastructure, the impact of that opportunity has not yet appeared in the company's forward guidance. Twilio serves over 400,000 customers including 68% of Fortune 500 companies, but the decelerating growth and elevated valuation raise concerns that investors may be overestimating the AI catalyst.
Rapid7, Twilio, and Teradata Shares Soar on US-Iran De-escalation
Shares of Rapid7, Twilio, and Teradata jumped in afternoon trading after the United States and Iran agreed to halt tit-for-tat military exchanges, easing fears of a wider Middle East conflict. Rapid7 rose 4.8%, Twilio gained 4.6%, and Teradata advanced 5%. The de-escalation removed a macro overhang by lowering oil prices and reducing inflation impulses that had pushed traders to price in a Fed rate hike, benefiting long-duration growth software stocks. The move also built on a chip-to-software rotation sparked by a report that OpenAI may delay its IPO, which softened fears that AI labs would quickly cannibalize incumbent SaaS companies.
Goldman Sachs initiates Twilio with Buy, $300 target on AI and margin potential
Goldman Sachs initiated coverage on Twilio with a Buy rating and a US$300 price target, highlighting the company's role in AI-powered customer engagement and its margin expansion potential. The call comes alongside upward revisions to earnings estimates and Twilio's raised 2026 revenue guidance. CEO Khozema Shipchandler recently celebrated a decade on the NYSE, underscoring the company's positioning as core infrastructure for AI-centric businesses. The investment narrative now focuses on whether AI features and omnichannel tools can shift the mix toward higher-margin software while keeping core messaging relevant and compliant.
Twilio shares rose 2.34% to $188.34 in the latest close, outperforming the S&P 500's 0.1% decline. The Dow gained 0.35% and the Nasdaq fell 0.43%. Analysts project the company's upcoming earnings per share at $1.32, a 10.92% increase from the same quarter last year, with revenue expected to reach $1.42 billion, up 15.84%. For the full year, Zacks Consensus Estimates forecast earnings of $5.64 per share and revenue of $5.81 billion, representing increases of 15.34% and 14.61% respectively. Twilio currently holds a Zacks Rank of 3, or Hold, and trades at a forward price-to-earnings ratio of 32.64, a premium to its industry's average of 17.83.
AppLovin Favored Over Twilio for 2026 on Stronger Sales and Income Growth
The Motley Fool analysis picks AppLovin over Twilio as the better technology stock to buy in 2026, citing far stronger projected sales and net income growth. AppLovin’s revenue is expected to rise nearly 50% in fiscal 2026, with net income projected at $5.43 billion, nearly matching its entire fiscal 2025 revenue of about $5.5 billion. Twilio’s sales are forecast to grow 15% to roughly $5.82 billion, with net income of $339 million, but its growth lags behind AppLovin’s. While Twilio has a defensible moat through network interconnections in nearly 200 countries and 4,800 cell providers, AppLovin’s AI-driven advertising platform and pivot after privacy crackdowns give it a stronger earnings trajectory. AppLovin also appears cheaper on a forward P/E basis at 29.9 times versus Twilio’s 32.57 times, though Twilio has a much lower price-to-sales ratio of 5.6 times compared to AppLovin’s 25.9 times.
Workday, Procore, and Twilio Shares Fall as AI Fears Hit Software Stocks
Shares of Workday, Procore Technologies, and Twilio declined in afternoon trading as a broader sell-off in communication-services and software stocks was triggered by high-profile AI talent departures from Alphabet and regulatory concerns. Workday fell 4.4%, Procore Technologies dropped 3.7%, and Twilio slipped 2.4%, with the declines reflecting persistent market fears that AI agents will erode the subscription-based revenue model of traditional enterprise software. The previous week's nearly 20% single-day drop in Accenture after it cut its growth outlook and cited AI compressing demand for IT services reinforced the thesis, while the launch of more capable AI models like Anthropic's Claude Fable 5 and Claude Mythos 5 added to the pressure. An incident involving a US Apache helicopter near Oman and Trump's call for a response to an alleged Iranian attack over the Strait of Hormuz provided an additional macro headwind, as software valuations are sensitive to interest-rate expectations. Workday is now down 45.5% year-to-date and trading 54.7% below its 52-week high of $247.69.
Cloud & Digital Infrastructure › Horizontal SaaS ▼Competition
Artificial Intelligence › AI Applications & Copilots ▼Competition
Cloud & Digital Infrastructure › API & Integration (iPaaS) ▼Competition
Cloud & Digital Infrastructure › Vertical SaaS ▼Competition
PCOR · Technology · Negative AI agents threaten to erode subscription revenue model of traditional enterprise software, and Procore is part of the sell-off.
TWLO · Technology · Negative AI agents threaten to erode subscription revenue model of traditional enterprise software, and Twilio is part of the sell-off.
WDAY · Technology · Negative AI agents threaten to erode subscription revenue model of traditional enterprise software, and Workday is part of the sell-off.
Twilio, Atlassian, and SoundHound AI shares fall as investors rotate from high-growth software names
Shares of Twilio, Atlassian, and SoundHound AI declined in afternoon trading as investors rotated out of high-multiple growth stocks that had led the recent rally. Twilio fell 4.1%, Atlassian dropped 4.5%, and SoundHound AI lost 5%. The sell-off was driven by a sharper-than-expected May import price report showing a 1.9% monthly rise versus a 1.1% forecast and a 6.7% annual gain, the largest since August 2022, which complicated the view that the Iran peace deal had resolved inflation concerns. Additional pressure came from a Bank of America fund manager survey in which 28% of respondents cited an AI bubble as the second-largest tail risk, and from SpaceX's announcement that it is acquiring AI coding platform Cursor for $60 billion, signaling consolidation of valuable AI software assets. Investors also positioned cautiously ahead of new Federal Reserve Chairman Kevin Warsh's first meeting later in the week.
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