Why This Cloud Communications Stock Could Deliver Multibagger Returns While Others Scramble for AI Gains

When it comes to artificial intelligence exposure in the stock market, most investors immediately fixate on the obvious names. But what if the real opportunity lies elsewhere—with a company that’s quietly crushing expectations through AI integration rather than AI hype?

The Hidden AI Play Everyone’s Overlooking

Twilio (NYSE: TWLO) operates in the cloud communications platform-as-a-service (CPaaS) market, providing APIs that enable businesses to connect with customers across text, email, voice, and chat. While this might sound unglamorous compared to flashier AI narratives, the company has fundamentally transformed how enterprises deploy customer engagement strategies—and AI is supercharging this transformation.

The numbers tell a compelling story. In Q3, Twilio’s active customer accounts surged 22% year-over-year to 392,000, a dramatic acceleration from just 4% growth in the same period the previous year. This acceleration isn’t random; it’s driven by widespread adoption of Twilio’s AI-powered tools, particularly agentic AI and conversational AI solutions.

The Compounding Growth Machine

What’s particularly impressive is the expansion in customer wallet share. Twilio’s dollar-based net expansion rate hit 109% in Q3, up 4 percentage points from the prior year. This metric reveals that existing customers are spending more with Twilio, not just that new customers are signing up. Combined with a 22.5% year-over-year earnings increase to $1.25 per share on 15% revenue growth, Twilio is demonstrating genuine operating leverage.

Perhaps most revealing: over 20% of Twilio’s customers now use multiple products—a direct result of AI-driven cross-selling opportunities. Management sees substantial runway for expanding this penetration further, which could unlock significant earnings upside in coming years.

The Valuation Disconnect

Here’s where investors should pay attention. Palantir Technologies (NASDAQ: PLTR) surged 156% this year on AI enthusiasm but now trades at 126 times sales. Yes, Palantir delivers strong AI software solutions, but the valuation has become prohibitive—evidenced by the stock gaining just 6% over the past three months despite solid recent results.

Twilio, by contrast, trades at 4.5 times sales. Even by conservative assumptions, this represents exceptional value. The CPaaS market itself is projected to grow at a 19% annual rate through 2034, expanding from $23 billion to $108 billion. Twilio currently captures roughly 22% market share; if this expands modestly to 25% by 2034, revenue could approach $27 billion.

At just 5.5 times sales (in line with Nasdaq Composite multiples), Twilio’s market cap could potentially reach $148 billion from its current $22 billion—representing genuine multibagger potential without relying on valuation expansion beyond industry norms.

Why This Matters Now

The AI opportunity in cloud communications is still in early innings. As enterprises prioritize personalized customer experiences powered by large language models and predictive analytics, demand for Twilio’s platform should accelerate further. The company’s improving growth trajectory, expanding margins, and reasonable valuation create a compelling risk-reward profile for long-term investors seeking authentic AI exposure rather than AI-themed speculation.

The stock has already appreciated 36% over the past three months, and while that’s no longer the surprise entry point it was weeks ago, the underlying fundamentals suggest the runway may just be beginning.