- NVDA
- PLTR
- SOUN
The demand for artificial intelligence (AI) software is rising rapidly, with Gartner projecting a 60% increase in AI software spending this year to $453 billion, followed by a 41% jump next year to more than $638 billion.
This terrific growth isn’t surprising, as integrating AI-focused software tools into business operations is boosting productivity. A Morgan Stanley research report noted earlier this year that companies using AI for at least a year have experienced an 11.5% increase in productivity. Not surprisingly, companies such as Palantir Technologies and SoundHound AI that sell enterprise AI software solutions have been experiencing healthy revenue growth.
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However, both stocks have been underperforming this year. While Palantir stock is down 3% in 2026, SoundHound AI has dropped 29%. Cloud communications specialist Twilio (NYSE:TWLO), meanwhile, has clocked impressive gains of 57% in 2026, driven by growing demand for its AI tools.
Let’s see why that has been the case, and check if Twilio can sustain its impressive rally in the future and make investors richer.
Twilio’s AI tools have improved its growth trajectory
Twilio released its Q2 results on Aug. 6. The company’s revenue increased 22% year over year to $1.5 billion. Its organic revenue increased by 17% year over year. What’s more, Twilio reported non-GAAP earnings per share of $1.47, up by 23% from the year-ago period.
There’s no doubt that Twilio’s growth is nowhere near the phenomenal performance of SoundHound and Palantir, but it has been stepping on the gas lately. For instance, its revenue increased by 13% year over year in the same quarter last year. The improvement in Twilio’s growth rate is driven by increasing adoption of its AI solutions.
The company has traditionally provided application programming interfaces (APIs) that help its clients stay in touch with their customers across various channels, including voice, text, email, chat, and video. However, it has now expanded beyond its core business, offering clients AI tools to predict customer behavior, build AI agents and conversational AI solutions, automate workflows, and improve security.
The good news is that these offerings are becoming popular among customers. For example, an automotive fintech company that used Twilio’s conversational AI platform to build an AI assistant has witnessed a 1.6x jump in lead conversion. This client signed a seven-figure deal with Twilio to implement its conversational AI offerings.
