Prediction: This Artificial Intelligence (AI) Software Stock Will Outperform Palantir, According to Wall Street (Hint: It’s Significantly Cheaper)
Palantir Technologies (PLTR -2.56%) is among the leading names in the artificial intelligence (AI) software space, helping customers integrate generative AI into their operations to improve productivity and realize other benefits.
However, Palantir stock has been overshadowed on the market this year by another software specialist. Shares of cloud communications provider Twilio (TWLO +3.85%) have jumped by 46% in 2026, as of this writing, while Palantir has been flat. In fact, Wall Street expects Twilio to continue outperforming Palantir over the coming year.
Let’s see how much upside Twilio stock could deliver, and why it looks like a better buy compared to Palantir.
Image source: Getty Images.
Twilio’s price target suggests that it can outpace Palantir
Twilio has a 12-month median price target of $274, implying 32% upside from current levels. Meanwhile, Palantir’s 12-month median price target of $225 suggests a potential jump of 26% over the coming year. It is easy to see why that’s the case.
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TWLO & PLTR: Performance Comparison
Key Financial Metrics
TWLO – Twilio
$215.60
+3.85% (+$8.00)
PLTR – Palantir Technologies
$173.77
–2.56% (-$4.58)
Market Cap
$32B
52wk Range
$105.00 – $308.40
Gross Margin
48.08%
P/E Ratio
26.12
EPS (TTM)
$7.95
Market Cap
$429B
52wk Range
$106.37 – $212.94
Gross Margin
84.80%
P/E Ratio
151.97
EPS (TTM)
$1.17
TWLO – Twilio
$215.60
+3.85% (+$8.00)
Market Cap
$32B
52wk Range
$105.00 – $308.40
Gross Margin
48.08%
P/E Ratio
26.12
EPS (TTM)
$7.95
PLTR – Palantir Technologies
$173.77
–2.56% (-$4.58)
Market Cap
$429B
52wk Range
$106.37 – $212.94
Gross Margin
84.80%
P/E Ratio
151.97
EPS (TTM)
$1.17
Twilio is significantly cheaper than Palantir in terms of valuation. This is evident from the following chart.
TWLO PE Ratio data by YCharts
Of course, Palantir deserves to command a premium owing to its incredible growth, but Twilio is also growing at a nice clip. Twilio’s Q2 revenue increased 20% year over year to $1.56 billion, while non-GAAP earnings per share (EPS) increased by 32% to $1.65. Wall Street would have settled for $1.47 in EPS on $1.51 billion in revenue.
Even better, Twilio’s Q4 guidance landed ahead of expectations. The company expects revenue to increase by approximately 17% this quarter to $1.6 billion, ahead of the $1.58 billion consensus estimate. Also, the midpoint of its EPS forecast of $1.48-$1.53 is nearly in line with the $1.49 consensus estimate.
Another important point worth noting is that Twilio has increased its 2026 revenue growth estimate to 20% from the prior estimate of 18%-18.5%. Twilio has been integrating AI tools into its cloud communications platform to help its clients stay in touch with their customers across multiple channels, such as voice, email, text, chat, video, and others.
The company’s conversational voice AI tools allow customers to build and deploy agents that can automate tasks and improve productivity. This explains why Twilio has been winning more business from existing customers. Its dollar-based net expansion rate of 114% in Q3 improved by five percentage points from the year-ago quarter.
This metric compares spending by Twilio’s customers at the end of a quarter to the spending by the same customer cohort in the year-ago period. A reading of more than 100% means that Twilio’s existing customers are spending more money on its offerings, and that should translate into solid earnings growth over the long run.
Is the stock still a good buy?
We have already seen that Twilio stock has delivered healthy gains in 2026, and analysts expect it to jump higher over the coming year. Also, Twilio’s EPS growth expectations have been rising, with analysts anticipating double-digit earnings growth for the cloud communications provider.
TWLO EPS Estimates for Current Fiscal Year data by YCharts
The chart above indicates that Twilio’s earnings-per-share growth is on track to accelerate in 2028. So, there is a strong likelihood that Twilio stock will indeed head higher in the future.
An improvement in spending by existing customers, along with the secular growth of the AI software market, will be tailwinds for the company. Also, its cheaper valuation could help it outperform Palantir over the coming year, suggesting that it isn’t too late for investors to buy this AI stock following healthy gains in 2026.
Source: www.fool.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.