We recently compiled a list of the 15 Software Infrastructure Stocks Outperforming In 2025. In this article, we are going to take a look at where Twilio Inc. (NYSE:TWLO) stands against the other software infrastructure stocks.
Software stocks had a troubling end to the last year and some even continued to fall during January. After a solid year, profit-taking would have been acceptable. However, the continuous decline in January had investors worried, with some media personalities calling it the end of software stocks.
It didn’t take the market long to change its views though. In general, software stocks are not as negatively impacted by tariffs as hardware stocks. Since Trump took over, people have been evaluating their options and with tariffs on the horizon, found software to be a relatively safe sector.
There were some concerns on the AI front as well. The emergence of DeepSeek AI has meant that companies in the US may not be willing to spend more on their AI ventures. Similarly, businesses could simply use DeepSeek’s much cheaper technology, causing downward pressure on subscription prices for instance. So far, none of this looks like becoming a reality, so on the back of solid earnings, most software stocks have comfortably outperformed the market.
We decided to take a look at the top 15 stocks that are outperforming the market so far this year. To come up with our list of 15 software infrastructure stocks outperforming in 2025, we only considered stocks with a market cap of at least 2 billion that were outpacing the broader market till the end of last week.
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Twilio Inc. (NYSE:TWLO)
Twilio Inc. is a customer engagement platform solutions provider that operates in the Twilio and Twilio Communications segments. It offers different software solutions and application programming interfaces for interactions between end users and customers. The stock’s 35% YTD returns have excited many investors after a dull first 9 months period for the company in 2024. The stock has more than doubled in a year.
Twilio’s resurgence is possibly due to it being on the cusp of an inflection point. Apart from an improving business, the company’s financial strength is also going up. It took some cost-reduction measures as well as efficiency improvements, both of which are contributing to its improving free cash flow.
The topline acceleration that the company now expects is set to finally make the company profitable on an operating income level in fiscal 2025. Once that happens, the business will have developed much more if it continues at the current pace. This inflection point has the potential to re-rate the stock, bringing incredible returns for investors.
Overall TWLO ranks 3rd on our list of the software infrastructure stocks outperforming in 2025. While we acknowledge the potential of TWLO as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is as promising as TWLO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.
