This Artificial Intelligence (AI) Stock Is Crushing Palantir in 2025. You Should Buy It Hand Over Fist Before It Becomes a Multibagger. | The Motley Fool

Palantir Technologies ( PLTR 2.81%) is likely one of the first names that comes to mind when investors are looking for a company that's capitalizing on the proliferation of artificial intelligence (AI). The company's expertise in the generative AI software market is a big reason why that's likely to be the case. After all, Palantir's Artificial Intelligence Platform (AIP) has been a massive hit among customers looking to integrate generative AI technology into their operations, helping them achieve significant productivity gains . Unsurprisingly, Palantir's growth has accelerated remarkably this year, leading to a 156% surge in its stock price. However, concerns about Palantir's expensive valuation have weighed on the stock of late. This is evident from a 6% increase in its stock price over the past three months, despite the company delivering a solid set of results just last month . However, shares of Twilio ( TWLO +0.13%) have surged in the past three months. The stock has appreciated an impressive 36% during this period, significantly outpacing Palantir's gains. Let's examine why that has been the case and why it may be a good idea to buy this stock right away. Image source: Getty Images. AI is boosting Twilio's growth Twilio is a cloud communications specialist that offers application programming interfaces (APIs), allowing its clients to communicate with their customers across various channels, including text, email, voice, chat, and others. The company's solutions have helped replace traditional contact centers. Its clients simply need the internet and a computer or smartphone to get in touch with their customers, rather than setting up physical contact centers that are more costly to establish and maintain. NYSE: TWLO Key Data Points Apart from APIs, Twilio's cloud platform also offers AI-driven insights to its clients. For instance, Twilio customers can improve engagement and drive stronger sales with the help of AI-driven predictive analytics and recommendations. The company enables its clients to make personalized large language models (LLMs) based on customer data to gain a better understanding of customer habits and deploy marketing campaigns accordingly. Importantly, Twilio's customer base is growing at a faster pace thanks to the adoption of its AI offerings. The company's active customer accounts increased by 22% year over year in the third quarter to 392,000. That was much better than the 4% increase in its active customer accounts in the same quarter last year. An improvement in the spending of existing customers also accompanies this healthy increase in Twilio's active customer base. The company reported an increase of 4 percentage points in its dollar-based net expansion rate in Q3 to 109%. This metric compares the spending by Twilio's customers at the end of a quarter to the spending by that same customer cohort in the year-ago period. A reading of more than 100% means that existing customers purchased more of Twilio's offerings, and the good part is that this metric expanded at a healthy pace. Twilio believes it can continue to win a bigger share of its customers' wallets through the...

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