Why Jefferies Analysts Think Twilio Stock Can Gain 20% from Here

Investment bank Jefferies recently raised its rating on Twilio (TWLO) to “Buy” from “Hold.” Jefferies expects Twilio's revenue to be significantly boosted by its status as the leader of the Communications Platform as a Service (CPAAS) market and by the proliferation of its Voice AI tools, which are used to produce “automated, conversational voice interactions.” Further, the firm's launch of additional products and increases in the revenue it derives from its current customers are likely to raise its net retention levels, according to Jefferies, which placed a $160 price target on the shares. 

Although Voice AI does sound like a meaningful long-term opportunity for Twilio, it is possible that the company will at some point in the coming quarters or years start to be disrupted by producers of AI systems such as Anthropic. Magnifying my concern about this issue is the fact that Twilio's CEO and its CFO have sold sizable amounts of the company's shares since Dec. 31, while other insiders have also unloaded significant amounts of the name, and no insiders spent money on acquiring shares in the last year. The insiders' behavior could have been caused by their worries about the potential threat from AI vendors. 

In light of this risk and the extensive share sales by insiders, investors should avoid TWLO stock.

About Twilio

Twilio's software facilitates communication and the development of communication tools while also providing businesses with other types of software, including Segment, a data-analysis tool. The San-Francisco based firm's revenue climbed 14% in the fourth quarter versus the same period a year earlier to $1.37 billion, while its earnings per share, excluding some items, advanced to $1.33 in Q4 from $1 in Q4 of 2024.

It has a market capitalization of $19.9 billion and changes hands at a forward price-earnings ratio of 52.95 times.

More About Jefferies' Note

Twilio's revenue should grow in the 5% to 9% range over the longer term, driven by its status as one of the top CPaaS vendors, while its new Voice AI products are poised to meaningfully increase the funds that it obtains from its Voice segment, Jefferies forecasted. Specifically, Jefferies expects the firm to collect “$383 million of Voice AI revenue..by 2028." Overall Voice sales will climb roughly 40% as a result of the increasing percentage of Voice revenue derived  from AI offerings, the investment bank stated . However, Jefferies added that the company's total revenue would only get a boost of 5% in 2028 as a result of the latter trend. 

Still, the investment bank estimated that overall Voice revenue would constitute about 18% of the firm's overall sales in 2028, up from 12% in 2025. Consequently, it's possible that in the years after 2028, the growth of the firm's Voice AI business could increase TWLO's revenue by meaningfully more than 5%.

It appears that, in five or ten years, Voice AI could potentially move the needle a great deal for Twilio and TWLO stock.

The Threat From AI Vendors

Twilio's ConversationRelay offering currently utilizes Claude, Anthropic's AI model, as a voice assistant, meaning that Twilio and Anthropic are currently partners. Still, that is unlikely to prevent Anthropic, at some point in the future, from duplicating Twilio's software, including CoversationRelay, which enables employees to chat over the phone with Claude. 

Unlike some software, Twilio's offerings do not appear to require a great deal of data to work well, making it easier for AI model makers to offer similar products. And while some or all of Twilio's technology may be protected by patents, I did find evidence suggesting that at least some of its offerings can be legally duplicated. 

Specifically, roughly two months ago, Hjalmar Gislason, the founder and CEO of GRID, reported on LinkedIn that his company had saved $32,000 annually by cancelling Twilio Segment and software from another firm. Gislason noted that his company had used Anthropic's Claude Code to create a substitute for Segment in “about two days.” He added that, “Custom solutions that fit your exact needs are (now) a weekend project.”

Insider Share Sales

Just since Dec. 31, CEO Khozema Shipchandler divested 39,266 shares for about $5.2 million. During the same period, CFO Aidan Viggiano unloaded 34,771 shares of the company in exchange for about $4.6 million. Both the CEO and CFO received shares at no cost through options, but neither spent money to buy shares. And while many other insiders sold sizable amount of TWLO stock in the last year and obtained shares at no cost through options, none purchased shares with their own funds.