Prediction: Investors Rotating Out of Tech Will Regret Missing This Artificial Intelligence (AI) Growth Stock

Tech investors pressed the panic button in the first quarter of 2026, with the Nasdaq Composite index dropping 7% over this period due to the uncertainty created by the war in the Middle East.

It was easy to see why investors rotated out of tech stocks during this turmoil. The sector has delivered impressive gains to investors in recent years, primarily driven by the rapid adoption of artificial intelligence (AI) technology. So, when investors fled to safety amid the Iran war, booking profits in tech stocks to preserve capital became a viable option.

But the Nasdaq Composite has made a solid turnaround lately, especially amid generally positive news on the ceasefire and negotiations emerging from the Middle East. The index is up 11% in April, suggesting that investors have regained some of their confidence in tech stocks. However, the Q1 sell-off means investors can still buy some top AI growth stocks at discounted valuations. Twilio (NYSE: TWLO) is one such name.

Let's see why you may regret not buying Twilio after the recent tech correction.

Image source: Getty Images.

Twilio could quietly outperform the market's expectations

Twilio is a cloud communications company that helps its clients stay in touch with their customers across several channels, including voice, email, text, chat, and video. The company uses AI to help clients improve their customer service. Twilio's Conversational AI platform, for instance, helps users automate customer support tasks, assist customer service associates with real-time inputs to deliver the best responses, and enhance sales and cross-selling opportunities by automating customer responses.

Importantly, Twilio's AI solutions are driving sales growth. Its customers are purchasing more than just one of its products, with the company noting on its February earnings call that its "multiproduct customer count grew 26% year over year, and our software add-on revenue grew over 20% year over year."

Specifically, Twilio's voice AI solutions are quite popular among customers. Its voice AI revenue rose 60% year over year in Q4 2025. The higher spending by existing customers is evident from Twilio's dollar-based net expansion rate of 109% in the fourth quarter of 2025, an increase of 3 percentage points year over year. The metric compares the spending by Twilio's customers at the end of a quarter with that of the same cohort in the year-ago period.

A reading above 100% suggests higher spending by existing customers. The good news for Twilio investors is that its active customer accounts grew by almost 24% year over year to 402,000 at the end of 2025. The new customers that Twilio added should ideally pave the way for stronger earnings growth at the company once they purchase more of its solutions.

Strong earnings growth should be a tailwind for the stock price

Twilio's earnings increased by 33% in 2025 to $4.89 per share. Consensus estimates project double-digit growth in the company's earnings over the next three years, but don't be surprised to see it outperform those expectations.

Data by YCharts.

But even if Twilio's earnings grow in line with Wall Street's expectations and it trades at 32.4 times earnings at the end of 2028 (in line with the tech-laden Nasdaq-100 index), its stock price could jump to $237, based on the earnings estimate of $7.32 per share seen above. That's a potential 63% jump from current levels over the next two years, which is why investors should consider buying Twilio, as it could surge on growing demand for AI software solutions.

Harsh Chauhan has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Twilio. The Motley Fool has a disclosure policy.