Wells Fargo is initiating coverage of Twilio (NYSE:TWLO) with an Overweight rating and a $130 price target, as it is a well-positioned provider of infrastructure for the growing market of voice artificial intelligence applications.
Twilio shares perked up 2% by noon trading on Wednesday.
“We are noticing stronger voice AI momentum (checks/startups noting increasing wins) and in 2Q25 TWLO noted voice revenue growth improved back to above double digits,” said Wells Fargo analysts Ryan MacWilliams and Chris Brazeau in an investor note. “Startups are starting with Twilio by utilizing TWLO’s APIs and SDKs to build their own AI agents on top of TWLO’s rails. OpenAI’s Realtime API (went GA at the end of August) powers complex voice AI conversations and is often utilized in conjunction with TWLO by developers.”
Wells Fargo also noted that Twilio’s operating and free cash flow margins have steadily improved over the past three years. Operating margins improved to 18% in the second quarter of 2025 compared to minus 1% in the same quarter three years prior. Meanwhile, free cash flow margins reached 17% during the second quarter of this year versus negative 8% three years ago.
Twilio also trades at 15.1 times its estimated enterprise value to free cash flow for calendar year 2027, compared to its peers trading at an average of 31.1 times. This equates to upside potential in its share value.