Jefferies’ upgrade of Twilio (TWLO), tied to its role in Voice AI and followed by an earnings report that topped revenue expectations and guidance, has pushed the stock firmly back onto investors’ radar.
See our latest analysis for Twilio.
At a share price of US$132.56, Twilio’s recent 7 day share price return of 5.36% contrasts with a 90 day share price decline of 7.24%. The 1 year total shareholder return of 62.97% points to momentum that has built over a longer stretch.
If Twilio’s Voice AI story has your attention, it could be a good moment to widen your search and check out 36 AI infrastructure stocks
With Twilio now trading at US$132.56 and sitting at an estimated 18.5% discount to one intrinsic value estimate, the key question is whether you are seeing a genuine opportunity or a market that is already pricing in future growth.
Most Popular Narrative: 11.7% Overvalued
The most followed narrative for Twilio puts fair value at $118.66, below the last close of $132.56. This sets up a clear valuation debate.
"TWLO is a top Quant-ranked Internet Services and Infrastructure stock and an Alpha Pick selection offering businesses a communications platform that enables companies to integrate various tools into their applications using APIs. It provides services for messaging, voice calls, video, email, and other forms of communication, allowing developers to build customized customer engagement experiences. Twilio is strategically focused on embedding AI and Machine learning throughout its platform, having recently announced an integration with OpenAI’s new real-time API, enabling customers to build powerful conversational virtual agents. This focus has fueled near-term growth, with Q3 revenue up 10% Y/Y, exceeding guidance, and FWD EBITDA growth of 51% vs. the sector’s 6%. This growth has translated to a Q3 non-GAAP operating margin of 16.1%, 290 basis points above the previous year. The company also boasts $830M in cash from operations, which is more than 700% above the IT sector median."
Want to see what kind of revenue trajectory and margin profile are being baked into that fair value? The narrative leans heavily on profitability momentum and a richer future earnings multiple. Curious which assumptions really pull the valuation above today’s price? The full breakdown connects those operating metrics directly to the $118.66 figure.
Result: Fair Value of $118.66 (OVERVALUED)
Have a read of the narrative in full and understand what's behind the forecasts.
However, you still need to weigh risks such as execution on AI integration and any slowdown in revenue or margin progress that challenges the current valuation story.
Find out about the key risks to this Twilio narrative.
Another View: 18.5% Undervalued
While the popular narrative sees Twilio as 11.7% overvalued at a fair value of $118.66, the SWS DCF model points the other way. It puts fair value at $162.70, around 18.5% above the current $132.56 share price. Which story do you think better fits the cash flow path you believe in for Twilio?
Look into how the SWS DCF model arrives at its fair value.
Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out Twilio 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 61 high quality undervalued stocks. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.
Next Steps
With such a split view on fair value and mixed sentiment around risks and rewards, it makes sense to move quickly and dig into the numbers yourself so you can decide which side you are on, starting with the 3 key rewards and 2 important warning signs
Looking for more investment ideas?
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This article by Simply Wall St is general in nature. We provide commentary based on historical data 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 financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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