We recently compiled a list of the 10 AI News Updates Investors Should Not Miss. In this article, we are going to take a look at where Twilio Inc. (NYSE:TWLO) stands against the other AI stocks.
Chinese artificial intelligence company DeepSeek is threatening to bring to an end the Wall Street artificial intelligence-driven rally. The company, stating that it developed an AI model that matches that of American rivals while using inferior chips, has left the markets on edge, triggering double-digit percentage losses in the US equity markets.
In late December, DeepSeek released a large language model that is free and open-source. The company claimed that the model was created in two months for less than $6 million, significantly less than what their Western counterparts have demanded. According to numerous independent tests, the model also performed better than OpenAI’s most recent model.
The prospect of DeepSeek disrupting US tech dominance on artificial intelligence solutions is one factor that is sending jitters in the investment community. Its R1 and V3 models outperforming the likes of ChatGPT while using inferior chips has once again put to question the hundreds of billions of dollars that US tech giants have spent and committed to spend in a bid to spearhead the AI revolution.
Alexandra Wang, CEO of Scale AI, told CNBC last week that DeepSeek’s last AI model was “earth-shattering” and that its R1 release is even more powerful.
“What we’ve found is that DeepSeek … is the top performing, or roughly on par with the best American models,” Wang said, adding that the AI race between the U.S. and China is an “AI war.”
Over the past two years, US equity markets have raced to all-time highs amid blockbuster gains in companies exposed to the AI frenzy. In the end, valuations have gotten out of hand as investors placed bets while shunning multiples that have gotten to all-time highs. In comes DeepSeek, which is the catalyst that could once again trigger a significant pullback after months of blockbuster gains.
Even as the DeepSeek sell-off continues to rattle the markets, stock bargains amid the AI revolution are cropping up. While semiconductor companies have been the hardest hit owing to concerns that companies will no longer spend big on hardware for AI, there are companies still positioned to benefit even with the expected capital expenditure cuts.
Some of the best and safest AI plays amid the DeepSeek news are companies already leveraging the technology to strengthen their offering, especially on the software front. Cybersecurity companies using AI to detect and deter attacks should continue being at the forefront of the AI revolution. Likewise, companies leveraging AI to enhance cloud offerings stand to reap big even as China takes the war to the US on AI innovation.
For this article, we selected AI stocks by going through news articles, stock analysis, and press releases. These stocks are also popular among hedge funds.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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Twilio Inc. (NYSE:TWLO)
Number of Hedge Fund Holders: 52
Twilio Inc. (NYSE:TWLO) is a leading provider of cloud communications platforms. It provides various application programming interfaces and software solutions for communications between customers and end users. Goldman Sachs analyst Kash Rangan upgraded the stock to a buy with a $185 price target on January 27th. The upgrade came on the company disclosing better than expected preliminary fourth-quarter results and better than expected 2025 outlook.
The better-than-expected financial results come when Twilio Inc. (NYSE:TWLO) is increasingly pursuing artificial intelligence-driven solutions. The company has already inked a strategic collaboration with OpenAI and has started integrating AI capabilities into its product offerings. With the help of AI, it has also succeeded in enhancing its self-service options, allowing customers to easily integrate its services into their applications. The company strongly emphasizes data use and AI-powered customer engagement solutions, which may lead to new revenue opportunities and platform use cases.
Overall TWLO ranks 4th on our list of the AI stocks investors should not miss. While we acknowledge the potential of TWLO as an investment, our conviction lies in the belief that 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 more promising than TWLO but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap.
Disclosure: None. This article is originally published at Insider Monkey.
