These Artificial Intelligence (AI) Stocks Are Quietly Outperforming the Market

AI-driven stocks Twilio and Snowflake have significantly outperformed the Nasdaq Composite in the past year, with gains of 115% and 64% respectively, and analysts project further upside. Twilio, trading at 26x forward earnings, leverages AI to enhance its customer engagement platform, leading to increased customer spending and an 8% organic revenue growth forecast for fiscal year 2025. Snowflake's AI-focused data cloud tools are driving customer growth and a 34% year-over-year increase in remaining performance obligations, prompting an increase in fiscal 2026 revenue guidance and projected earnings growth of 33%.

Analysis

Artificial intelligence continues to be a significant growth catalyst in the stock market, with projected overall AI spending anticipated to reach $628 billion by 2028. Within this landscape, Twilio (TWLO) and Snowflake (SNOW) have demonstrated substantial market outperformance and exhibit potential for further upside driven by their AI integrations. Twilio's stock surged 115% in the past year, significantly outpacing the Nasdaq Composite's 11% gain, yet it maintains a valuation of 26 times forward earnings and 4 times sales. The company's growth is fueled by its expanding customer base, which increased by 7% year-over-year to over 335,000 active accounts in Q1 2025, and the successful cross-selling of AI tools, evidenced by a five-percentage-point year-over-year increase in its Q1 fiscal 2025 dollar-based net expansion rate. Consequently, Twilio raised its full-year organic revenue growth guidance to 8%, with analysts forecasting a 24% earnings increase this year. Snowflake has also seen impressive share price growth of 64% over the past year, bolstered by the adoption of its AI-focused data cloud tools. Nearly 45% of its 11,600-strong customer base utilized its AI tools weekly in the previous quarter, contributing to a 19% year-over-year customer growth in Q1 fiscal 2026. This momentum is reflected in a 34% year-over-year increase in remaining performance obligations to $6.7 billion, surpassing its product revenue growth of 26%. Management has accordingly raised fiscal 2026 revenue guidance, and earnings are projected to grow by a third to $1.10 per share in the current fiscal year, supported by a rapidly expanding total addressable market estimated at $342 billion by 2028.

Key Decisions for Investors

• Investors should evaluate Twilio's current valuation in the context of its strong customer growth, increased AI-driven customer spending, and raised revenue guidance, which collectively suggest continued earnings expansion.
• Consider Snowflake's robust growth in remaining performance obligations and customer adoption of AI tools as lead indicators for future revenue, especially given management's upward revision of fiscal 2026 guidance.
• Monitor the sustained adoption rates of AI-specific offerings for both companies, as this is a critical driver for their projected growth trajectories within the expanding AI market.
• Assess the potential for further multiple expansion for Twilio, given its current forward P/E relative to projected earnings growth and comparable tech index multiples.